Doug, the racks are supposed to be oil (80w90 gear) lubricated, but I think some people have switched over to using grease because the oil often just leaks out (especially with crappy new ill-fitting boots...). Mike Dailey's site has details on this (as you probably already know, but in case others reading don't):
http://www.panteraplace.com/page76.htm
My rack had a weird slop to it and it turned out that a previous owner had replaced the bushing and neglected to tighten the D/S retainer nut all the way before crimping it. Your flexing is an odd one, but now I want to go check mine to see if it acts the same way.
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