Problem with 24-70 F2.8L USM

[Daniel Browning]

Is this sort of performance normal for this lens?

Definitely not. It looks very out of focus, even for a 40D.

It looks and feels like it hits the focus limiter before it comes to focus from 24-35mm or so.

If it was, that would definitely explain why it looks so out of focus.

Is the wider aperture somehow showing up a focus problem that narrower apertures mask?

Yes, the deeper DOF of narrow apertures can fix defocus blur.

I'm just trying to decide if this should be returned or just sent to Canon.

I would definitely try to return it first.