The top of the key should be dead flat. It does look like there are hunks out of yours. A tiny hunk in the teeth would break one -- there's no clearance between teeth, and it would probably break by trying to grind a sliver of cardboard, let alone a sliver of hard steel.

I've seen improperly installed keys chew right through the cam retaining plate, also resulting in broken teeth.

You're correct that the gear itself cannot cock on the cam IF it seats all the way, but cocking wouldn't cause a broken tooth. You have the reason before you -- breakage of the key, almost certainly damaged on installation. I blame IPD for lots of stuff on occasion, but not this time.