Also a quicky. Since quads are build of 2 triangles, this could mean some distortion could happen, no matter how good you bakes/cages/normals. This is especially true for very long polygons. Try adding a loop cut down the middle,vertically, where the distortion is taking place. See if that helps.
I separated the "border" sides, as you can see from this snapshot, and I made all the border edges normal of the uvisland "hard", while all the other "soft": It fixed the "weird reflections" and the "weird cavity", but now I get a little seam all along the border that you can see here: I really don't understand why it is…