Hi Cornerspeed.
Indeed, the slop in the spur shaft parts diminished greatly when assembled. It seems to be down to about 0.5mm, just as you said it should be. I'll leave it as-is for now, and make any necessary changes if I see that there's any premature wear on the gears as I run.
I'm a little bit surprised that Kyosho neglected to give proper set-up info for the ZX-5 in the assembly manual. It would definitely be an asset to know how all the different parts and adjustment holes affect handling & performance.