I found time to finally get it on a lift and take it apart. It was what I initially suspected - the pinion bearing. Or to be more exact, the pinion bearing race. The race seems to have cracked and a piece flaked off. The bearing them generated a bunch of noise and friction on that broken surface. No other damage has occurred, luckily. I replaced both pinion bearings and races and re-set the backlash to .010" and the pinion preload to 18 in-lbs. No noise woohoo!
