4 speed ka-booom !

Boring? perhaps. But lots more consistent, and easier on parts. But nothing sparks adrenaline like banging gears!

jpar
if you are at under 450 HP, like me, the hard parts in that 2.66 low box are almost indestructible. You may round of the clutch teeth or break brass forks or rings, and/or pop the struts out, but the gears and synchronizer assemblies can last for 40 or more years. I can't speak to more than 450hp, cuz I have not been there. I have built 833s for 500 hp, and so far none have come back.
But 30 passes on a small 8.75, and a noisy one at that; I would be looking into her. Especially since you say it worked in reverse, which drives the pinion backwards. I suspect the pinion nut worked loose and it climbed into the ring-gear.
Oh yeah, a chipped tooth on low gear, I wouldn't worry about, as long as the piece is not still in the tranny. And 50/50 ATF/EP oil works well.
G'luck