Thanks again Cass.
After further diagnosis. My pinion nut was most definitely NOT backed off. It took an elephant sitting on a 4 foot cheater bar to break it. I guess i was measuring bearing preload improperly before.
I pulled a shim out and torque the nut again. It seemed REALLY tight. I then rotated the pinion about 50 revolutions in each direction and it seems to loosen up a bit. Final reading after that was about 23 in-lbs.

I'm gonna install tonight and see if that helps.

Would a bearing preload of 5 - 7.5 in-lbs cause a clunk in the rear end, and possibly a little steering wheel vibration on sweeping corners?