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Jeff,
In all this, we're going with the 85-year-old matriarch's assessment that the noise is coming from the timing gear. AFAIK, that can only be due to the gear coming apart, and/or to excessive end float. I had doubts about either being the case when you reported essentially no wear on the old thrust plate, but...
Take off the distributor by undoing the two bolts that fasten its hold-down clamp to the block (then you don't need to retime it when it goes back on). Extract the drive gear, noting its exact orientation. Do NOT turn the motor.
Now use a big screwdriver or something to pry against the block and the drive gear on the cam. You should not be able to cause any noticeable fore-aft movement of the cam. If there really is enough endplay to make an audible knock, you'll be able to move the cam enough to tell.
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