what does the mfg of the gear suggest for pinion bearing preload? If its Yukon then they spec 17-30inlb on new bearings for pinion preload. and backlash of .006-.010". RTFB. so I guess your within spec on the pinion preload but tight on the backlash.
Its a little hard to tell by the lathering of marking compound.
as I pointed out. a light coating on 2-3 teeth is all you need and I personally would love to see what I call the residual pattern. its where the yellow gets rubbed off on other ring gear teeth as the pinion comes around a second and third time in contact. the pinion pics up the yellow from where you applied it. this is an idea of what I mean on coating just 2-3 teeth or in this case 4.
and then the pinion comes back around and does this...
But here is the real kicker... your trying way to hard for a front axle. the pattern you have is perfect for a HP 4wd front dana 60. its not a high speed axle. its a trail axle. your gonna unlock the hubs if you go onto the street and the axle won't spin at all. then when your in the rocks, even an "ok" pattern is fine because your not spinning at any significant speed to create any significant heat to ruin the gearset. and your never gonna hear it whine.
Its also a myth that erring to tight on backlash will compensate for an off pattern and make up for it in deflection. Its the other way around. but thats a whole nother argument.
without being more anal about the application of the marking compound, I'd say leave it alone. if your happy with it. (read previous comment again).
If I sound like an ass tonight... sorry, its tired and I'm late... I'm still beat from 3 days in Johnson Valley