Here’s a few more photos of the shift drum. Hondaman thought that could be the issue. Got the 2nd gear in from CycleX with undercut dogs.
The Neutral Bump looks to be OK, but the bent alignment flange, not so much. This will tend to bind and drag the rotation when it comes up against the spring detent wheel, making the shift action stall out and miss the full shift. This essentially holds it in-between the gears when that happens. The "crisp" shift these bikes are known for was due to a combination of the dry sump, the large gears and loose dog tolerances, so there is a lively difference between them when they negotiate the final dog-in-slot move, making the clunk we all know so well. This also makes the wear marks you see, and since 1-2 happens a LOT in this bike, they wear the most for it.
The wider Neutral detent yours has indicates it is a late K3 or later type "improved" shift drum. These have a little slower 1-2 shift but a more easily-found Neutral on a hot day, as it holds the fork's dog in-between the gears a little bit longer in travel.