Yes that's Normal. look at your pto flywheel. The inner part is what rides on the seal. Also have a close look at it for scoring. There may be pitting where the seal was riding and it might lead to you tearing up the seal.
racerxxx mentioned earlier about his mod to add the counterbalance access port in his build thread. Not hard to do and it means you can change it when ever you want instead of when she blows

I do mine every 50 hours like the 96 manual says.
and FYI, last rebuild i did was with WSM top end kits and for the second ring I couldn't find any specs for which way the ring went (writing up or down) After lots of searching and calling wsm i found out that the ring is square and could go either way. ( reason i questioned it is because the writing i thought was supposed to face up but on the wsm they put it on the bottom of the upper ring. so i thought both rings were supposed to have the writing face down)
Anyways, back to the build