Just my experience and
Unless you plan on driving this Scrambler really long distances on the interstate at above 65 MPH speeds, keep the T176
I have even ran the T176 with 33's, 4.10 gears on a few long (350 miles one way) trips, not terrible, but 65-70 is about the max speed I would want to push.
I went from a T176 to a T5, I broke three of them while driving on the interstate, 75 MPH. All of them, front gear on cluster gear, input shaft gear, completely destroyed, no other damage.
Stockish size tires, stockish gears, stockish power, the T5 should be OK. Modify any of those parameters, or all three like I did, I think you can expect trouble
The T176 is a much stronger transmission then the T5. When you open up the T5, compare the size of all the parts. In manual transmissions, bigger is better.
As for your T176, the bottom gear with slightly chipped teeth is the reverse slider gear IIRC. I would not worry about that. If reverse worked fine before, it should be OK.
If I were you, I would find a good USED T176 cover, and then rebuild the T176. It is easy to rebuild. DO NOT BUY AN AFTERMARKET TOP COVER OR SHIFT FORKS, they will not work correctly