Nano-rod dispersions in steady shear exhibit persistent transient responses both in experiments and simulations. The rotational contribution from shear flow couples with orientational diffusion, excluded-volume interactions, and distortional elasticity to yield complex dynamics and gradient morphology of the rod ensemble. The classification of sheared responses has mostly focused on "nematodynamics" of the collective particle response known as tumbling, wagging and kayaking: in heterogeneous simulations, one monitors the variability in nematodynamics across the domain. In this paper, we focus on flow coupling and non-Newtonian feedback in transient heterogeneous simulations, and in particular on a remarkable effect: the formation of localized, pulsating jet layers in the shear gap. We solve the Navier-Stokes momentum equations coupled through an orientation-dependent stress to three different orientational models (a kinetic Smoluchowski equation and two tensor models, one from kinetic closure and another from irreversible thermodynamics). A similar spurt phenomenon was reported in 1D simulations of a model for planar nematic liquids by Kupferman et al. [R. Kupferman, M. Kawaguchi, M.M. Denn. Emergence of structure in models of liquid crystalline polymers with elasticity, J. Non-Newt. Fluid Mech. 91 (2000) 255-271], which we extend to full orientational configuration space. We show: the pulsating jet layers correlate, in space and time, with the formation of a non-topological "oblate defect phase" in which the principal axis of orientation spreads from a unique direction to a circle; the jet-defect layers form where the local nematodynamics transitions from finite oscillation (wagging) to continuous rotation (tumbling), and when neighboring directors lose phase coherence; and, a negative first normal stress difference develops in the pulsating jet-defect layers. Finally, we extend one model algorithm to two space dimensions and show numerical stability of the jet-defect phenomenon to 2D perturbations. (C) 2008 Elsevier B.V. All rights reserved.