JohnF...Welcome to the forums and thanks for posting this question with clear photos! The two pictures bring back a flood of memories. I faced your dilemma as far back as 1969 with my 1950 CJ3A's Warner T-90 restoration, when parts were still readily available and cheap. Much more recently, I covered the rebuild of a T-90/T-86 in my Jeep CJ Rebuilder's Manual: 1946-71 edition.
I rebuilt a number of Warner T-85, T-86 and T-87 units between 2005 and 2008, including a 'fifties Hudson T-86 (see broken housing repair in slideshow) plus Jeep and Ford applications. I knew every NOS and replica parts source in the U.S. at the time, and parts were difficult to source. That can only be worse now.
The use of the T-86 has to do with ratios and the V-6. As you discovered, any cluster gear with limited demand or unusual ratios can drive up the cost of replacement parts. The cluster gear is a common failure part on manual 3-speeds like yours without synchromesh on first gear. The first and reverse slider is the other half of the equation, clashing into first gear on downshifts when the vehicle is not fully stopped.
My time-honored conversion to a true truck-grade T98A (Jeep version) or T18 four-speed (also covered in the CJ book, using adapter parts available through Advance Adapters) is an option. You mention a budget, and that may rule out the T98 or T18, since you would need adapters and at least a used transmission in good condition. I feel obliged, however, to mention this option; the addition of a low 6.32:1 first gear ratio (if you use the more common Ford truck T18 unit described in Advance Adapters' catalogs) with synchromesh on 2nd through 4th gears is a real off-road and overall drivability gain. With a compound first gear, you start out in a synchromesh second gear most of the time...
Back to your current dilemma, I see no advantage with the T-90 over a T-86 transmission. Their stamina is similar despite ratio differences. (The V6 use of the T-86 is more to do with ratios than any advantage over the T-90.) I quick-priced a quality T-90 cluster gear at the Advance Adapters site, and the full retail suggested price is $250 for the cluster gear only.
I've seen few bargains on T-90 parts in recent years. Also, installing used gears and mixing the 2nd/3rd speed gears with a used cluster is not a good idea. Tooth contact patterns are well-established on used gears, and the case determines the alignment of the gears. This mixing gears from a donor transmission could lead to trouble.
A T14A transmission swap might be a prospect, these were all-synchromesh (on the three forward speeds) transmissions used behind the V6 beginning in 1968; in the CJs with a V6, they were mated to the Spicer Model 18 transfer case through 1971. Here is a description, note that the CJ V6 models use a different length input shaft than the '72-up AMC/Jeep CJs. You would need a T14A from a Jeep CJ V6, with all parts that make up the installation. (Compare from the bellhousing back to the transfer case, make note of any distinctions.) There may be a slight length difference over the T-86, likely not enough to cause any driveline length issues or mount problems.
Now, let's get on to your idea of grinding off the chipped teeth ends and reshaping the damaged cluster gear's engagement teeth. Simply put, you cannot do this, and the reason is clear. These gears are machined from annealed metal (likely 8620 or a similar base material), then they are case-hardened. Case hardening penetrates the shell of the machined gear between 0.030" and 0.060", depending upon the gear application and original engineering specifications...
The case hardening is already missing at the chipped teeth you illustrate in your photos. If you grind off the damaged tooth ends evenly (which may not allow enough gear width for proper tooth engagement with the sliding gear), the cluster will have soft gear teeth—at least at the first gear engagement points. This would result in rapid failure of the remaining material at the engagement end of the 1st gear cluster teeth.
I have restored a cluster gear. At the magazine, you can explore the article and slideshow I did on welding and heat treating an extremely rare Ford T85N cluster gear (click here to view the article and slideshow presentation). This Warner 3-speed with overdrive gearbox, only used for a few years, was a rare option. These non-synchromesh on first gear transmissions nearly always need a 1st/reverse slider and a new cluster gear during a rebuild! The cluster gear is cut helically and creates the need for a virtual full stop of the vehicle to engage 1st gear without clash.
I searched the U.S. and had excellent parts sources at the time: None had this cluster gear, though I was fortunate enough to locate an NOS 1st gear slider. In the slideshow, you will discover that the first step in fixing gear teeth is to have the gear "normalized" at a heat treating shop. This takes the hardness out of the case hardening (not a full annealing) and permits welding on the teeth in a normalized state. I carefully TIG welded the damaged teeth, using a Weld Mold Company filler rod that has the same properties as 8620, the most likely metal type used to make the original gears. After building up weld material, I very carefully hand-ground and shaped the teeth, constantly using the opposing gear as the guide for tooth shape and angle. (Note: Cutting teeth could have been done with machine tools at greater expense. Shops like Advance Adapters can cut gear teeth of this design.)
Final shape done, the gears were aligned in the case, and I used tooth contact paste to confirm the engagement pattern as you would with a ring-and-pinion gear check. Once certain the teeth were shaped properly, I sent the cluster gear back to the heat treating shop for case hardening to proper Rockwell C hardness and case depth. (For those interested, this is a carburizing process to case harden these gears.) At last, I assembled the gearbox with new bearings, small parts and new synchronizer blocking rings, bringing the unit and overdrive to original factory specifications.
Caution: Welding without the normalizing process is impossible, even with high-tensile "as welded" filler rod. The welding heat will soften the case hardening adjacent to the welds! If you should ever have to reconstruct a gear or other case hardened part, the method begins with normalizing, then welding with a filler metal that matches the normalized base, then machining, then re-heat treating.
John, I trust this is helpful. The new cluster and slider gear pricing sounds "normal" for these parts today. Be clear about the quality, though, as most vintage parts are off-shore sourced, some match up well and are built to standard. Know your source and compare parts carefully with the OEM pieces.
Would be pleased to continue this discussion, hear more about your Kaiser-era Jeep CJ V6 4x4, and know that you're headed toward a street and trail worthy rig!