MacBook – How to reset the service battery warning

Don't worry. It will use the wall outlet if that offers enough power which it should using the original AC adaptor.

What if the power is going from 100% down to 99.6%, then back up to 100% constantly?

That was until about a decade ago or so. Modern laptops even don't charge your battery if it is eg. at 98% for reducing unnecessary cycles. Don't bother about your battery in your computer.

If you want to care for your battery, just remember every cycle shortens battery life, no matter if 10 minutes on battery or completely emptied it. The battery has also some natural aging, so it will die after some years even if you never touch it.

It does seem like you have a problem with your battery, although it's likely that it's only adding to the underlying issue which you've touched upon.

The concept behind Speedstep seems good, however, the way in which it works is quite bad — especially when it comes to kernel_task. I believe it's the reason you're seeing such a dramatic slowdown — because this "feature" is consuming the majority of your MacBook Pro CPU so it can apparently cool your system down and save energy.

Intel SpeedStep Technology allows the system to dynamically adjust processor voltage and core frequency, which can result in decreased average power consumption and decreased average heat production. (from Intel)

What this equates to is you end up losing a significant portion of the CPU while SpeedStep hijacks kernel_task and continually carries out low-overhead tasks until the CPU temperature drops. Your system essentially becomes bogged down so you can save energy regardless if you want to or not. I would imagine that most people expect to be able to use all of their CPU power when they want to — not when their system allows them.

Luckily this “feature” is built into a kext, in which each model identifier specifies how to control the temperature of the CPU. It's a simple fix, and most people that have similar issues to what you describe are quite happy once they realize this. I take no credit for this fix, for it's all thanks to Rhys Oxenhams who researched this and came up with a solution.