1964 Rear Dana 44 Rebuild

[Hopeitstarts]

Hello all,

I'm working on rebuilding the rear differential on my '64 GMC. I've got it off the truck, cleaned up, and stripped (bearings, racers, seals, etc). I'm on a budget and I've never done this before, so I'm looking for community advice. The pinion gear looks pretty chewed up to me, but the o-ring gear looks great. I don't want to spend the money if I don't have to, but also don't want to have to do this again (rebuild the rear). I plan to use this thread for all my future questions as well, but here are the ones I have at the moment:

1. Does the pinion look too chewed up to you guys?
2. These things are pricier than I'd like, is there a way to buy just the pinion gear and not the o-ring too?
3. If I have to buy new, should I drop down a ratio for better highway driving? The engine is the 3.8L 230ci and the current diff ratio is 3.54.
4. I hate spending more money, but would it be worth it to put a limited slip in while I have it a part?

Thanks for any advice you can offer.

-Jared