The rim of the cheap steel base ammo expands once fired and then presses againts the outside metal tab where the locking lug slot is. This area comes from the factory with all sorts of machining grooves for the rim of the case to grab onto. As you can see i ground and polished the machine markings out and the gun fires cheap ammo flawlessly now.
It seems, at least in my case the chamber itself had little to do with the problem as i had both remington and a private gunsmith hone and polish the chamber and it didnt fix the problem.
I may have this bare metal parkerized again to keep rust off it. well see.
Hopefully some one else with the same problem (anyone who buys a new 870) will read this and save them a lot of hassle.