Ok this is just my opinion which doesn't count for much. Now if I were splitting the engine to work on the transmission: I'd be sending the unit to Robinson industries and have them under cut the gears; add the new billet fourth gear they make; and 500 bucks later I'd be riding and not worrying about the trans.
Wow ! Like so many of the early ones your inner bearing is installed backerds ! The oil seal is facing the oil supply
It's a wonder it held up this long. You still have the original style bearing in the back. The later ones are a double sealed bearing.
Now I'm fighting getting the flywheel off. Have the 32mm plug, destroyed a couple of flange bolts. Went and purchased some hardened washers and a steel spacer to try. Really want to get her opened today.