Greetings!
First, change your load interval to 30 second on the interface and monitor what's the average incoming traffic. Are they above 256K?
Second, check to see if you have any output drops? If does, then the traffic shaping is taking effect.
Third, remove the traffic shaping configuration and see if the interface is still flapping. If it does, then the problem is nothing to do with the traffic shaping.
Feel free to open case with TAC 24x7 at 800-553-2447.
Best Regards,
/Bessie