8.75 diff - metal in oil (pictures). Is it ruined?

looks like whoever put the bearing on used a torch to heat the bearing --wrong on all counts unless you were stuck in some remote place --- were the ring gear attaching bolts plated gold colour when new -- the plating will come off the heads of the bolts during use and show up as gold (brass coloured) bits in the oil.
since it is apart I would replace that blued pinion bearing and any others that show this bush fix condition -- find a reputable shop to rebuild your diff with proper pinion bearing preload and correct backlash , gear pattern etc. --- one question to ask the person who will do the rebuild is -- what do you set the pinion bearing preload at --- if they look at you like your from another planet ,,, or say we set them tight -- walk away and find someone who gives you the correct answer.
majority of car/light truck differentials are set to 8-15 in/lbs. with used bearings ,,, 20-25 in/lbs. with new bearings