Manual says brakes need to be "broken in". Is grinding a condition that might go away after break in? Never had this in any new car.

i doubt those brake pads need to be bedded.

Nope. Mine do squeal faintly though, at certain low speeds (e.g., rolling up to a stop sign).

do 4 80mph stops and the squeal should go away.

thanks - I suspected it was temporary and would perhaps come and go as the pads wore on

it was like the traction control was on. I had the discs reground and it came back. I had the pads replaced and it came back. I was told that it is common now days as there is no asbestos in the material (huh? how long ago was that)and the alternate materials used run hotter. We solved it by packing between the actuator and the pad with heavy grease (though I totally recommend no one does this to their q7) but not permanently. I so hope i am not going to have this problem again only with Audi. Personally i always thought it was caused by tiny amounts of play in the control arms allowing partial rotation of the whole hub structure under stress.
It was always worse when towing or showing off.

I hope you get it sorted.