Minor discovery but at least I now know why the transmission was binding. First discovery was a red herring -
Bearing on intermediate shaft was misaligned. Couldn't figure out how it had been shimmed in that condition and fit in the case. Turns out it had slipped on the shaft when I heated the case and removed all three shafts. Next I tried to simulate how the dogs are aligned through all the gears. I would imagine the pro's are rolling their eyes - feel free to tell me I'm completely off track. This is first gear -
All the gears spin smoothly on the output shaft except for first - it's seized on its bushing. With great effort, I can spin it. It's obvious now that's been the problem all along. Sheesh!
Now that I'm focusing on the output shaft, I realize the other bushings are worn and the gears have a lot of play. Clearly, I need to replace all the bushings.