A machinist may be able to build up the splines on the input shaft and recut them square. Probably more expensive and time consuming than buying a new shaft.
It's possible the the PTO bushng may be playing a part in your problem if there is slop in the joint. It should be relatively tight. Tight enough that the PTO will turn from drag with the tractor idling in neutral with no implement hooked up to the PTO. I doubt there is any flex in the shafts.
The splines become worn from people trying to engage the PTO before the input shaft quits spinning. They then just grind the PTO splines into mesh, causing the angled wear, which causes the rear pressure that wears the finger on the lever.
Check to see that the input shaft doesn't have any (or very minimal) front to rear movement. If it does, the input shaft front bearing retainer is probably installed backwards.
Retainer is #30 in this pic. Input shaft is #26http://www.cleancomputes.com/Cub/Cub%20Parts%20Manuals/TC-37D%20Revision%201%20(Revised%2012-54)/Chassis/Page-88.jpg
Collar is #14http://www.cleancomputes.com/Cub/Cub%20Parts%20Manuals/TC-37D%20Revision%201%20(Revised%2012-54)/Attachments/Page-134.jpg