Ok I have been trouble shooting this all evening. Thanks so much for the awesome response here!
I traced the binding to the clutch cable. The pedal assembly looks good. I have paperwork that shows the clutch cable being replaced last year. It looks new. I was able to almost eliminate the binding by pulling down on the clutch cable down by the clutch while my wife pushed the pedal in and out.
Should the clutch cable run above or below the throttle bell crank? Maybe it was ran wrong? Right now it goes above the throttle bell crank before going into the body.
So should it look like this picture:
http://www.pelicanparts.com/techarticles/911_clutch_replace/pic35.JPG
or this picture:
http://www.pelicanparts.com/techarticles/911_clutch_replace/pic22.JPG
Also, I hate the way the pedal feels. Somebody mentioned removing the "horseshoe" spring. Is there after market clutch springs that give a more even clutch release feel?