Sorry I don't see a suspect groove only the side of the bias belt edge. You've obviously witnessed the belt riding above the top of the clutch sheaves? The frayed edges in my experience is basically normal but could indicate a rough surface or riding too deep into the driven (possible rivet contact). When you said turn a belt into crumb rubber I assumed it to crumble!!! I understand your terminology now after viewing the pic.
So what RPM are you able to get out of that basically stock clone, 4,400rpm is impressive.
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