Matt and Warren, thanks for the comeback but I am not sure if the pictures tell the story correct- maybe you are not sseing the parts as they actually are.
Excuse the terminology but,
The there seems no vertical movement in the shaft- definately not 1/8".
The gap I think you see, is the gap between the the bottom of the aluminum shaft and the thin washer looking thing!, but inbetween there is a bearing type spacer- I believe.
The washer or thin part is fixed in place and will not move!. The gears did not appear worn on the dist. gears. As for the internal gears, I am not sure how they should look?.
The original dist cap was not damaged but the graphite contact was worn down after 2 years and about 10,000 miles. The rotor was pitted.
please excuse writing!
As for the idle problem, I removed the O2 sensor cleaned it with electrical cleaner and put it back in and she runs like a charm!.