I'm presuming you mean the measurement was .012", not .0012". There is a phenomenon with small block Fords called Torque Convertor Ballooning, in which the T.C. actually balloons up, and puts excessive pressure on the crank and wears the bearings. This is usually caused by extreme temps, high rpms, and a weak or used T.C. It also usually requires 1000 miles of use to show up. I doubt this is your problem, but wanted to mention it. I don't recommend driving it further. It's not going to get any better. It needs to be fixed now. Hopefully, dissassembly will reveal the cause. If not, I would suspect an error by the assembler.
Take care
~Chris
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RACECAR spelled backwards is RACECAR
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