I have never looked closely at mine however just at a quick glance of yours that is a common technique however yours looks to have been installed by a former PO possibly after a new seal was installed?? That is how most if not all pinion/yoke nuts are. If you are not experiencing any problems such as leaking seals or slop in the drum then looks fine to me
Sorry to bring this up again instead of starting a new thread but I'm used to seeing the castle nut 19MM X 1.5 & a hole in the output shaft on all but one the tcases that I have. I have this one case (Marlin geared 3.64 10 spline) & it does have the stake marks on the output shaft, but a 19MM X 1.5 nut will not fit. I assume Toyota went to a 20MM X 1.5. I bought a nylock locally & will try that. What year did they switch to the stake nut in case I have to go to Toyota for this nut? Thanks.
Four speed transmissions had 16 spline output shafts 01/74-07/80, before they used a 19 spline output shaft, 08/80 and later...which 08/80 and later also coincided with the changeover from a one piece transfer case to the split case.
Previous to 09/73, the transfer case output shaft nut used to retain the parking brake drum and front output yoke was a castle design requiring the use of a cotter pin.
I'd be cautious of that too. Without full thread penetration of the nylon, it may not hold well. Also by making the nut thinner, you have weakend the holding ability of the nut.
Another issue, is that there is the potential to produce enough heat in the shaft to melt the nylon. It would have to get pretty hot, but that is the drawback of nylocks on drivetrains and engines. That is why the staked nut, cotter pins or jam nuts are used instead.