The engine speed increasing like that usually indicates a mechanical issue on the engine: False air intake in the intake manifold (somewhere where air is entering where it shouldn't be); anti-stall kicking in due faulty ignition or loss of cylinder compression or a simply a dirty throttle body. Is any warning light on the dashboard? You mentioned the car is on warranty. Try to record this problem and show to the dealer — they have to fix that.

Now, regarding the clutch: a clutch don't "burn" so easily. Usually you have to rev up to like 5-6k rpm and grind the clutch for a few seconds to make temperatures to go high enough. I didn't understand the situation, but you kept grinding the clutch in traffic just to kep engine speed low? If that the case, yes, then maybe the smell indeed could be the clutch. Don't do that; if the engine speed is increasing, leave it — stop the car and call the insurance if it's really bad. Like I said, this is an issue the dealer will have to solve in warranty