Why does this engine burn so much oil? Dealer said 1 qt every 1,000 miles is OK?

Dealers will alwyas say that. I would say that unless this is your initial break-in period, 1 qt every 1000 miles is a bit excessive for the RS4. I've only added 1/2 a qtr in my first 1500 miles and never needed a top off. Most people here have the same experience.

I was chit chatting to a tech on Sat about the carbon buildup issue and he mentioned they have a customer with an R8 burning a qt every 500 miles and AofA claimed it was normal! That's just wrong...

This is during the break in period. Car has about 2500 miles right now.

This is during the break in period. Car has about 2500 miles right now. Then that is par for the course.

If you continue to get that level of oil consumption, it may be a bit avg but still I wouldn't worry too much about it unless you drop to 1 qt for less than 1K miles.

Ultimately, the amount of oil consumption depends on how the engine was broken-in. Varying the rpms as much as possible will help seat the piston rings properly. My engine burns approximately 1/2 a quart per 5000 miles.