hmmm. that doesn't sound right. Have you tried flushing the hydro system? Maybe check the oil when this happens, if its cloudy (as cavitation makes it sound) maybe there is water or some other contaminate in the oil and thats causing the problem?
Other thought is if this is happening while the bucket is curled and thus the cylincers are extended is this causing a drop in oil in the resevoir to the point that there isn't enough for the system? Maybe check the manual for what position the bucket and boom should be in when checking the oil level.
This really sounds like a poor mechanic/dealer to me. You're rotating the bucket, how much oil is that pumping that its causing the problem? What happens if you did something more taxing than back dragging? Would the whole thing just stop completely and that would be normal? Find another mechanic or at least ask to demo another unit and replicate. If they have a gravel lot offer to back drag for them and see how they resond to that...