My Turbo II surges from about 1200 to 750 then back up and down. I think it's a pretty good chance that it could be the EGR Valve or the Idle Air Control Valve. I've seen many RX-7's that does this. My friend owned two and both did that.

 

Have you tried turning the screw in the BAC valve to adjust the idle? There's also a good chance that you have a vacume leak.

 

Yea, this has been covered a shitload of times. I've had to ask the question myself.

If you fix the following things, your surging will go away

-TPS adjustment
-Timing adjustment
-Vac Leaks (Must remove all vac leaks and get at a 800rpm idle)

Once those things are gone, you will have no more surging.