I greatly improved my site performance by combining my hack mentioned above (commenting out the PHP in W3TC which would dump the entire cache all at once) along with modifying, via my theme's functions.php file, some of the hooks that W3TC uses to determine whether to purge an object. Eventually I will block this action at the reverse proxy level instead of within the plugin so W3TC becomes upgrade safe again.
Example: W3TC will purge a post and any other associated objects (archives, feeds, etc.) depending on your settings when a comment is submitted but NOT approved for that post. So we were receiving Spam comments which were flagged by Akismet and dumped into either Spam or Trash, but yet W3TC still saw fit to purge the post from the cache immediately instead of waiting for the comment to actually be approved.
Bottom line: the Varnish purge criteria in W3TC is too aggressive and fails to consider the status of comment objects before issuing purge commands each time the object is saved in the WordPress DB.