Yesterday I finally had my knee surgery consult - so turns out that groove your patella sits in at the end of your femur - yeah mine is flat, so that's why my kneecaps basically just float around. When the muscles tense to straighten the leg (going all the way up and down the leg), it wants to pulls those tendons/ligaments straight and taught and this is what causes my kneecap to be pulled to the outside because that's just where it has room to go to.
There is also a small ligament on the inside of the knee that acts as a stabilizer for the kneecap - pulling it back toward the inside. They believe this ligament has been stretched, or torn off some time ago, allowing my kneecaps to float even more freely.

So there were two options -
1) super-duper major surgery involving carving / gouging out a groove in my bone for the kneecap to rest in.
2) Replacing the inner stabilizing ligament. They would accomplish this by drilling two holes into my patella, threading in the ligament (so it has 2 anchor points for balance), then anchoring the other end to my femur. This can be done with my own ligaments or with a donor's.

THey are recommending option 2. He said 9 months for full recovery only because they have to make sure the donor ligament takes. 4-6 weeks on crutches, motion rehab starting at like 2 weeks, cycling rehab at like 3 months, running after 6 (but I don't run, so,).

This is teh route I will go - just don't know when. I'm 35 now, and can probably hold off a little while.
MRI schedule for next week(ish) so they can really look at the soft tissue and make a true diagnosis and plan.

In the meantime, I am cleared to cycle - I just have to be careful. I did some short rides around the neighbjorhood over the weekend and while pedaling felt fine, i can't really stand and mash and put weight on it yet.