As a Cyclone user I keep a keen eye on all reports of these, good and bad, as I don't think that anyone wants to assume that it could never happen to them. Sorry to read that this has happened to you 10 inch
Looking at the photos, I see that the alignment of the loose 1st gear is very close to the bottom of the teeth on the cluster, as identified by the reference areas of contact/shine. I stripped my V1 after a few hundred miles when I managed to get my hands on some different thickness shims (since supplied with all Cyclones sold by Rimini... all V2s, etc.) and noticed that mine was also showing reference marks that allowed me to accurately see where contact was being made for each of the loose gears against the fixed gears on the cluster. I was very surprised at just how close one gear runs to the next, being fractions of a mm according to my reference marks! Thankfully, the shim that I was about to fit improved on the space and meant that the loose gears would be running more central to the corresponding fixed teeth on the cluster. However, this stripping and checking did make me wonder how many of the failures of these might be down to poor alignment of the gears, with the possibility of a loose gear fractionally making contact with the fixed teeth on an adjacent gear... with serious consequences!
Please note: From what I know about you, and your attention to detail, I'm not suggesting for one minute that you got anything wrong in your build (far from it), more just highlighting how accurate anyone putting one of these together must be. I had thought mine was 98% perfect with the shimming that I initially had and only stripped it after a couple of hunderd miles to get it 100% (a result of something new to play with and something not cheap to be sloppy with), so I was really surprised to see that my initial 98% happy 1st build was only a gnat's chuff away from allowing adjacent gears to touch! Indeed, margin for error on these boxes is so fine (5 in the space of 4) that I even wonder whether play/wear that many miles might result in could allow for loose gear drift towards the next gear teeth on the cluster?
To rule out the possibility of one gear touching the next, can you align loose gears with cluster, according to your reference marks, and see what your spacing was like? This might give the rest of us Cyclone users a better idea of what is going on inside our motors.
Again, sorry to read of your issues
Adam