Its a stock gear that someone heated to raise the surface hardness. No coating has been added. No machining has been done. How is it illegal again?

i'd call and bug the guy that you expect to build an engine for you. If they can't convince you they know what they're doing, you need a new engine builder that you're comfortable with. Also, if you're comfortable with their skill and reputation, you should trust their experience to tell you what is and isn't good for your engine.