Video was worth watching. . . pretty informative (for a newbie).

That's a good video. Thanks for that.

So good luck with it, regardless of which way you decide to proceed.

The diffs are pretty tough and the stockish motors don't make enough power to overly abuse them. They should always have a little bit of movement (lash). 1/32" seems really reasonable. I would put seals in it and run it

Thanks to all for feedback. I think I learned what I needed to know as a result. Gonna replace seals and gasket today and get it painted and back in the car.