Exactly Anthony.
It's not just the reduced contact area that can cause a failure, but the fact the edge of the main shaft gear tooth is subjected to greater load by the countershaft gear that is applying load 1/8" in from the edge. 1/8" in from the edge the tooth is much stronger.
This is why I wanted to capture the ware pattern on this 600
http://craigayl.home.comcast.net/600 (second picture from the top) While it has not failed, the front edge of the teeth are clearly under excessive load. The transmission would actually be stronger if the gears were machined down to eliminate any overlap
Craig