Possible custom panel layout issue

Hi Jeff, I am a little at a loss here of where to look next. I have tried many different settings, options, cache clears and theme saves etc. and am getting rather strange results. The issue I am having is possibly related to custom extra panel layouts in my sub-theme, see attached 'at-theme-issue.jpg' for the issue when I navigate to a panel layout for my website. This issue has occurred when updating at-them from 3.1 to 3.2, also creating a new sub-theme based on the new 3.2.

I have triple checked all settings in my theme (I attached my raw sub-theme 3.2 as rougespa.txt > rename to rougespa.zip) and also made sure the panel layouts files in 3.1 match the newly upgraded 3.2 panel layouts that I had used as a base previously. I also tested this theme on another local site for interest sake and I get the following errors with a blank screen of death: "Fatal error: Cannot redeclare template_preprocess_two_20_80() in C:\sitename\sites\all\themes\themename\layouts\panels\two_20_80\two_20_80.inc on line 48" and " Fatal error: Cannot redeclare template_preprocess_three_20_60_20() in C:\sitename\sites\all\themes\themename\layouts\panels\three_20_60_20\three_20_60_20.inc on line 65". If I comment out "plugins[panels][layouts] = layouts/panels" the error does away. The weird thing on my live site is that I do not see any errors at all and if I deselect all caching options under performance then the "at-theme-issue.jpg" reverts back to how it should look.

I need help as I do not know where else to look or what else to trouble shoot at this point. Maybe you can point in the right direction or maybe this is simply a bug, or there is a sub-theme setting I have not set correctly, or possibly the updated theme handles custom panel layouts differently? Let me know if you need more info.