I have been using the quicksilver pwc oil for the last 11 years with no problems at all. I used it in my skis for the 9 years we had them with no engine failure at all and they were run hard.
As far as cavitation issue, sounds like you are having issues with your carbon ring and the bellows. When you are idling it is most likely leaking water and then when you apply the throttle it is sucking in air. You may be able to loosen the clamp and slide it towards the front of the boat to apply more pressure.
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