I think I'm coming one step closer to this issue. Apparently, you can call someone using the headset by muting and unmuting the microphone. However I noticed with the headset plugged in, the mic seems to be routed through headphones themselves.
I discovered this by plugging in the headphones and trying to find where the mic is picking up. I used the sound recorder and noticed the vu bumped a little when I knocked the headphones around. I then picked it up and spoke into the headphones, and I got levels, albeit they were very little.
That means the microphone stream is getting routed the wrong way for recording. I even had a spare earbud with mic in my car that I tested. The mic didn't work, but the earbud did.
Is there a way to either edit the xml or a setting to fix the streaming issue for the mic?