OK. Called Reese and Emailed back and forth. At first their guys said normal wear!? And then also said that it looked as if the trunnions were hitting the ball nut in extremely tight turns. If you look close you can see some "witness" marks on the nut. I checked my trunnions and sure enough there are very small marks on there too. So what is happening is the trunnions are hitting the nut then being forced under, this in turn is pushing down the trunnion into the lower pocket and bending it down. Then that allows the trunnion to start to wear into the hitch head pocket due to less surface area. I'll  get mockup pics tonite if I can. 
At first they said no to a warranty replacement. I politely explained that the new design has a raised ball mount area which will allow the trunnion to turn without hitting the nut. Seems it was a design error that was remedied with the new design head. I offered to pay half of what the hitch head costs plus shipping. He then came back and said if I send in the old hitch they'll send me a new one. So tomorrow I will be sending them the hitch head. Should have the new one next week sometime!
Reese customer service comes through again.