I took a look at my rear tires about a month ago, and they were fine (or at least that is what I believed at the time). When taking a close look at them this weekend the inner shoulder on the rear tires were all worn down and the steel threads were sticking out. Any idea if this is a common phenomena or if I should be looking at any settings that might have gone wild? The car is a -96 TT.

 

Same thing happens to mine. How many sets have you been through? Also sometimes depending on model this is the reason for Porsches "N" rating on model specific tires. Each model car has a specific "N" Rating. You should look into this when purchasing them. Its difficult to understand the classifications and Porsche sometimes has changed very little in the model to designate this rating. Sometimes speed. Sometimes weight distribution. Sometimes transmission and suspension types.

Tires for your car (and mine) are Bridgestone Pole Position S-02 N3 I believe. Very expensive too.

 

depending on how much negative camber you have in the rear this is usually where these cars wear the rear tires the quickest...however, if your rear toe setting is off you will burn the inside edge even quicker no matter what your rear camber setting is...get the alignment checked when you put on new rears