Subaru knoiws about the problem! They issued a service bulletin on 01/15/04 Number 06-33-04 with a long list of models of '01 to '03 cars with the problem. I quote "The purpose of this bulliten is to address unevenly or prematurely worn brake pads. There is the possibility that the pads are too tight in the caliperand have insufficient clearance as a result of rust buildup and dirt. If that is the case, the backplate of the disc brake pads will need to be slightly filed no more than 0.1mm (0.0039") on each end to remove the rust." The service is covered under warranty, (the lower gas mileage isn't) but the fix doesn't last long if you are driving on dirt roads or on salted or sanded roads. I had an '01 Outback which needed front and rear pads every 20,000 miles. You could both smell and feel the drag when the brakes were sticking. I traded it in for a 2005. With 3500 miles on it I'm having the same problem - burning brake smell, drag, and decreased mileage.
