We utilize molecular dynamics Simulations to investigate the implications of micelle formation on structural relaxation and polymer bead displacement dynamics in a model telechelic polymer solution. The transient structural heterogeneity associated with incipient micelle formation is found to lead to a 'caging' of the telechelic chain end-groups within dynamic Clusters on times shorter than the structural relaxation time governing the cluster (micelle) lifetime. This dynamical regime is followed by ordinary diffusion on spatial scales larger than the inter-micelle separation at long times. As with associating polymers, glass-forming liquids and other complex heterogeneous fluids, the structural 7, relaxation time increases sharply upon a lowering temperature T, but the usual measures of dynamic heterogeneity in glass-forming liquids (non-Gaussian parameter alpha(2)(t), product of diffusion coefficient D and shear viscosity eta, non-Arrhenius T-dependence of tau(s)) all indicate a return to homogeneity at low T that is not normally observed in simulations of these other complex fluids. The greatest increase in dynamic heterogeneity is found on a length scale that lies intermediate to the micellar radius of gyration and intermicellar spacing. We suggest that the limited size of the clusters that form in our (low concentration) system limit the relaxation time growth and thus allows the fluid to remain in equilibrium at low T. (C) 2004 Published by Elsevier Ltd.