I did clean the IAC valve which did not reduce the idle fluctuation problem.
The problem is inside the transmission. Something called "Shift Range Indicator". I took the car to a transmission shop and let them check out the car.
Thier conclusion was that the shift range indicator (an electrical switch) inside the transmission is out of ("electrical") alignment with the PARK/BRAKE shift release mechanism in the center console of the car.
I guess both pieces are supposed to send info to the PCM at the same time.
They started the car (with me looking on) and one of the workers popped the shift cable off the transmission lever.......as soon as the cable came off the trans lever, that lever moved a slight fraction of an inch and the engine began idling like it is supposed to. Nice and smooth.
So basically I need to replace the shift cable so that the transmission lever can move fully into its PARK indentation (detent) inside the actual transmission. The electrical piece inside the transmission is also responsible for lighting up the PRND321 in the guage cluster.
UPDATE: I replaced the shift cable and everything is working fine again. With the new cable the shifter handle feels really solid where-as before, it felt a little sloppy.