The pits in the gear teeth are from normal wear of the net forged gears. You will see the same thing on the lower gears when they get to the end of their life cycle. The center of the gear tooth starts to give way and the metal flakes off. Depending on load and use this can happen very soon or not so soon.
To build the best upper you can, using XR parts? Aftermarket and Merc parts, well lets see. My understanding is that most aftermarket stuff still use the Merc XR gears. Some have a different clutch shaft and some use different bearings. The most important thing is setup, in my opinion. I have seen enough failures to guide me in the direction that I use to build an upper, and setup is a major component. Gear lash is critical and using Imco's method of rigid pinion system helps hold that lash. A good top cap is a plus, my opinion on what is the best is still not determined. I do know that each have different mesurements and some are better than others.
The problem you encountered is normal wear for the XR gears. They are not cheap, and I try to recommend use of the X gears when ever possible for longer life. But when boat size and Hp and use/abuse warrent the XR, well that's the price we pay. Next best step is a #6, or one of the aftermarket units that use XR stuff or the Bmax, but all have some issues and all have been broken at some point or another.
I hope this helps. If you want to, give me a call and we can discuss it..