Pinion Gear Chipped - is it ok to run?

not only low but inconsistent. The more I look at it the more I just want to throw it away.
But as to the chips
I would just die-grind it all smooth to reduce the chances of stress-risers.
And I would put my 430hp streeter right into that pig.
Shoot; with street-tires I have run waaaay worse.

But I would thoroughly check out the pattern and fix it as may be required..... first.
That video proves the pattern is bad. If those pics belong to that video, then you got some work to do; that's real noisy, it will be extremely annoying if you install it. It should be just about dead-quiet. And yes I hear your specific noise as well. Since it is in the same place every time, it has to be the pinion or it's associated bearings, or a specific location on the head of the pinion is hitting the diff-case, which is not uncommon..