An idle surge that bad has to be a huge vacuum leak. If you have access to an air compressor make yourself a "boost/vacuum leak checker" out of a 20oz mountain dew bottle top and a tire valve stem. Attach to the inlet of the turbo and have a buddy fill the stem up with 12-18lbs of pressure while you spray all your hoses, intake, turbo compressor housing, intercooler couplers with soapy water... I use simple green in a spray bottle. This will find any leaks small and large quickly. Fix as necessary
Spray around the intake where it bolts to the head.... Ive found alot of leaks around those gaskets that so called experts have missed. Make sure everything is good and sealed. If the idle surge continues, check base timing with spout out, set to 6-10'. If problem still continues look into fuel delivery problems. Reg, badly leaking injectors or pump possibly. If you had an adjustable FPR with gauge we could verify how the fuel pressure bleeds off and determine a fuel issue quickly
Something is telling the ECM to run full rich... even if it where stuck in open loop I doubt fuel mileage would suffer that bad.