In an attempt to demonstrate that this issue has nothing to do with my model, I've downloaded a model created by Antony Ward. He is a professional in the industry and has worked for EA and Atari. This file is generously provided by Mr. Ward for free as part of a tutorial on his web site.

Clicky: Mr. Wards Tutorial

Once ambient occlusion is applied to the model you can see the same types of artifacts on the characters breasts. You can download and test the model for yourselves. And let me know if you get the same artifacts. I used Mental Ray, Production: Fine Trace settings. Created a Surface Shader and attached the mib_ambientocclusion texture to it and then applied that to the model.

Thanks again for all your help guys.