Anyone have any ideas why latency might be tied to more bandwidth being used????
I think you're making an incorrect association, as you've written nothing to actually suggest there's "more bandwidth being used". I'm inclined to think it's an Xplornet problem. Unlike down here in the lower 48, Xplornet customers (are supposed to) benefit from VoIP acceleration. Unless I'm mistaken, SKYPE connections should go through the associated Xplornet VoIP acceleration server. Your description of the problem subsequently suggests that your SKYPE connections are for some reason are either being routed around that server, or being corrupted by it.
Turning on Skype video would increase the amount of bandwidth being used compare to voice-only. I think that what happened was that there was network congestion which increased the TCP-IP pauses. This increase in pauses / gaps in the transmission was interpreted as latency. You are probably correct regarding servers being the culprit....I suspect that my Skype traffic is being routed around around any VoIp server causing Skype traffic to be mixed in with regular downloads and other internet traffic. Since this episode, xPlornet has increased carriers to balance traffic better, so I will wait to see if this corrects the Skype problem.