If you have access to version 6 you could try contour there. In V6, Contour (and Section) use a different mesh/plane intersector. If it works better then we should log bugs for the mesh/mesh intersector that is used in V7.
In the case of polysurfaces, Contour does use a low level function that is different than intersection. It calls a function that does one face at a time. Intersection does an entire polysurface, I suspect that ultimately it also calls the one face at a time function though too, I just didn’t look.
I know these problems manifest themselves in Contour but they’re deeper than that. Contour just automates the process of making a bunch of cut planes, doing the intersections and joining the results. The key to fixing the problem is taking Contour out of the equation. I know you can’t see the models in the YT issue (the permissions are such that only developers can view them because you sent your initial model as a pm) but I was able to isolate cut planes that exhibited the weird behavior outside of Contour. Doing more of that and reporting them as surface/surface intersection problems or mesh/mesh intersection problems will help.
How did you create the polysurface in the first place? Did you make it entirely in Rhino?