Thanks @kio and @SnowInChina Well, It looks like you were right. Applying triangulation did help, which never occurred me to try the modifier. So thank you all for that fix. I'll also look into triangulating before baking, as I've never tried/thought about that either. Thanks alot for the help guys!
well the truth is - these are still triangles, its just hidden from you. So please just do what @Noors mentioned an try triangulating a quad in the two possible ways and see if the texture distortion gets better... that said, you when working with baked normalmaps, you really don't have any other choice than to triangulate…