I haven't done a Dana . But I did do an 8 3/4". Heated and quenched about where the perches would go. You could watch the tube move the wrong way when heated. Then move back when cooled. However the Dana tube is much thicker. I'll bet it would take a ton of heat. My bet is 1/8" probably won't hurt anything. Now if it had toe in/out that would be different. Bolt some straight stock (center a 3 foot piece) to the housing flanges and measure the difference at the front vs the rear. That'll tell you what the toe is. You could always cut the end off if its bad enough and reweld it on in the exact spot. Measure it first and see.
Doug