Mine looked like that too...
As far as I know, all the speedo gears for the non-stock final drives don't "fit" perfectly. Just depends how lucky you are as to how long they will last. I got another, from a Jeep dealership, and sanded down the knurls slightly. That helped. The second one has lasted a lot longer.
Check the chart...it gives you part numbers and everything. I dont know how much better it is, I just got the jeep one because theres a dealership that had them in stock, and I didnt feel like waiting for getting it shipped.
Mine's a 92 T5, but I don't know about you.
That is exactly why I advise people against reusing the 8 tooth drive gear when I rebuild their transmissions.
I just pulled my 23 tooth gear and it looked as bad after 3000 miles, freaked me out but I put it back in and it works fine.
If it stops working then I'm going to file the new one down some in the hopes that it lasts longer-the above post sounds like it will.
FYI- when I went the jeep delaer and asked for the 23 tooth gear with the part number parts guy told me its not stocked anymore-anywhere so I got it from a mustang parts place.