He said it was a 2013 with less than 29,000 miles on it in the OP.

 

They opened up the airbox and said it was an after market air filter. Its not the oily kind that you get at autoparts shop. It was paperlike and still clean when I looked at it. I agreed to switch it out and pay for it and the erratic rpm got better but it still lacks power when I accelerate and would rev at 2K~2.5K rpm without much acceleration. I didn't change the filter after I bought the car used at 19K miles so I can argue that. But I think it is also illegal for them to claim that (Magnuson-Moss Warranty Act). What I don't get is why they would care about covering it under warranty. Doesn't Mitsubishi pay them for the work if it is under warranty. This car started out being a nice ride but now its performing like a 4 cyl (maybe worse)

 

I'm really doubting the air filter is the issue, and the way that new MAF's work, it would really have to be cruded up pretty bad to start throwing off values, unless it was actually defective and not just dirty.

The dealer is just scapegoating the filter and shoving you out the door. They don't have time to do real diagnosis.

Now that you have a new filter, you can try unplugging the battery for a few minutes, then plugging it back in. Let the engine learn and see what happens.

 

Set up another appt. with the dealer for next week. I explained why it isn't the air filter/MAF/TB issue (thanks gggplaya) and they said okay let's look at it again. The car is now running a lot better than before but is still hesitates between 2K~3K rpm and doesn't have the same smooth acceleration before the problem started up. It's also much louder at 3K rpm than before. Does anyone know what the usual culprits are for these symptoms? What should I have them look at next week (apart from MAF flow data)?

 

Could be dirty fuel injectors or a possible fuel pump issue. I would think a computer check would reveal these issues or other possible "software" updates related to the fuel and power train systems.

 

To all who are interested in the outcome of the follow-up visit to the dealership.

Apparently this time a master mechanic (workshop fore-person) personally ran the diagnostics and walked me through it during the test drive. They did MAF sensor reading, gas pedal sensor (apparently this model is all electronically controlled), made sure software is updated to latest version as well as took the long term and short term fuel trims reading. All the readings are at optimum range and no fuel usage abnormalities are noted. There are also no error codes (including stored ones). During the test drive, I showed him how the rpm doesn't increase even when I depress the gas pedal and would only kick-up if I depress it more than what I usually would. The response I got was this is pretty normal and he suggested that I should use the paddle shifters to see if it helps. Anyways long story short, because all the diagnostics came back okay, there isn't anything more they can do. They did say if there is more deterioration they are happy to look at it again.
Personally I didn't expect a Japanese brand to have drive-ability issues even before the car hit 30K miles. I had originally wanted to upgrade to the 2016 Outlander or next years' PHEV but I doubt with this experience I will do so. I'm going back to Honda/Subaru in the future.

 

By the way, thanks everyone (guy, playa and jec) for reading my posts and pitching in with your very useful comments.