It looks completely acceptable. The oil needs changing. You are showing some typical wear on the tooth surface hardening. As long as it is smooth and not orange peel looking it is just wear. Nascar diffs almost turn red from heat. It is normal to have a lot of heat generated from a differential. The best thing you could do is put in a high quality oil. Now you have a Powr-Loc in there. One of the very best limited slips ever made. Thornton, the man who helped design the Studebaker cars assisted in the design of them. The way they transfer power to the spinning wheel is ingenious. The fact that you have a limited slip means adding a little friction modifier. That keeps the clutch plates from galling. And helps eliminate chatter and grabbing and releasing while turning etc. The thing with friction modifiers is that it make clutches slip, not grab. So I never put in as much as recommended. What I do is add a tablespoon at a time with a substantial test drive while trying a couple figure eights on a hard surface. If it grabs and lurches add a little more. Allow time for the modifier to get in the clutches. To much friction modifier makes it hard for the unit to do what it was designed for. And it won't hurt a thing with putting a lot in. It will just preserve your clutches for a good long time.
On a side note Powr-Loc's are pretty cool. In my CJ's (Dana 44) I will remove the 3 flat clutches and 2 curved clutches and replace 2 of the flat plates with curved. It makes them darn tight and in the rocks the Powr-Loc performs like a champ. But tight steering and understeer will go with it. Not that this applies to a rear diff on a Dodge, but it shows the uniqueness of the unit. Now the best possible way to go is a selectable locker. Full open or full locked. You can drive on ice that way. None of this really applies here so I will end the post. Get some high quality oil and keep it clean.
EDIT:
One thing you could check is the contact pattern of the teeth. Get some contact paste if it is not to inconvenient. Use a flux brush from the hardware store. Paint it on about 5 teeth both sides. leave no part of the teeth unpainted. Provide a little resistance on the diff while turning the driveshaft and run the painted teeth past the pinion teeth. Then reverse it so you can leave a pattern on the other side of the tooth. The pattern should be relatively centered on the tooth with a little border around the contact that should not really run past any edge top to bottom or the heel or the toe of the tooth. Good contact will push the contact paste away and leave the tooth with the metal visible. The paste will get displaced and pushed in all directions and pile up there. If your contact pattern especially on the drive side shows to be pretty much centered on the tooth, then you really have no issues except some typical wear. Sometimes wear can make the contact area grow. So most of the tooth gets contact. As long as you are not putting drive pressure on any one part of the tooth then it is doing it's job. You can pull up good contact pattern online. It is an easy check and will point to a problem if there is one. Checking backlash if you have a magnetic dial indicator is also pretty easy. Sorry if I went a little overboard here. I always run a pattern on oil changes.