I am not getting the time to put a basic scene together because it would require 2 examples to demonstrate the problem after what we found out further, but I will try to do so, I have also yet to look into the engine code for the morphs that you suggested.
For the issue of this post, I spoke too soon, while the above method worked to visually get rid of the wobble, we found out there are rotation jitters on the numbers when we applied a print to check out how clean the rotation values are, because functions applied to the values where jittering.
We pin pointed the culprit to bone rotations on our rig that are being driven by Biped. For some reason UE did not like the way the bones were oriented even though they are moving correctly and has been a standard workflow for us that always worked, and what does bone orientation have to do with jittery values during rotations inside unreal remains a mystery. Sicne even if you have incorrect rotation angles the bones should not jitter like that.
We scrapped the bones rotations and aligned them all to the world axis in pivot mode inside max and re-rigged them, this time it worked, but if you look at the bone orientations themselves they are unusable outside the rig. It is the first time we run into such an issue since we have been exporting countless rigs for years now. And only Unreal gave us these jitter values in all versions of the engine we tested them in, Once again we tested in unity to make sure the fbx was “clean” and no such issues came up there.
At least we solved our issue for now but without really understanding the reason of the problem. I will try to post something when i get the time.