Allowable slack in timing chain?

"Allowable" and what makes sense under the circumstances are two different things.
If you know it's 1/2", then you have it apart. Why do all of that work and then put it back together, knowing it'll have to come apart again?
Get a good double roller and then you can use it if/when you rebuild.
Maybe try advancing it a few degrees for some low end. I've done that on stock engines to try to help with MPG.