I work in IT as noc engineer and you are spot on, This cause by Dolby surround processing on the iCUE software, I try a number of versions and all do the same thing low and high volume, Random sound cuts, Distorted sound, audio crackle. Some games doing it more then others and radio steam as well. . If you switch to Windows's Spatial sound it will fixed the issue. Some people report no issue in wired mode this may be due to Dolby surround processing and the sound compression over wireless.
I am still running the iCUE software with DTX: Headphone:X and Equalizer APO, I dont know if I will stick with DTX but on 14 day trial.
Also I running the latest version of iCUE and the USB flashing red then turns off but does not impact sound quality. Quit iCUE and the light comes back on.
Corsair should to move DTX or dolby atmos, I dont think this issue is fixed able with the current dolby version. .