When in reverse at high rpms the transmission seems to disengage and it sounds like there are rocks rattling around in there. The boat reverses normally until about 2000 rpm and then the issue appears. Its totally fine in forward at high rpms. After this issue popped up I went to flush the ATF and found that the transmission was dry. I added some and ran the engine for a bit at the dock, and it all leaked out through the coupling plate. I added more and tried to put it in reverse again and the same issue. See the pictures where the splined shaft is visible out the back of the transmission. It seems like running the prop in reverse has pulled the entire shaft back. 

At the very least it seems like the aft seal is bad, but what would cause the loud noises? Is this completely shot?