why does a new or rebuilt motor have to be broken in? what actually happens to the engine during the break in process? is it to get all the parts used to the high temps and temp fluctuations so they dont get damage from temperature shock? anything else?

That's the general theory behind it. That and to let everything seal up good... I don't see the need for much more than MAYBE a hundred miles or so...

so then when its broke in the metal parts are more pliable....my friend just got an 04 wrx and he says hes supposed to break it in for 1000 miles

Do 500 miles with no boost and yer fine..

ill tell him that but he is extremely stubborn and afraid of breaking his new 26000 dollar car lol. i want him to break it in sooner cause i want to see him race this turbo eclipse running around

yea man just tell him to break it in until 500 miles not 1000

The reason for a break in period on a motor is not just for temp fluctuations and temp shock. It's also for the metal parts to seat properly. If you don't allow these parts to ware properly at first then they will break sooner. Tell your friend to stick with the 1000 mile break in period. If he doesn't and the motor goes before 1000 miles the dealer can void his warranty.