It's been a few years since I played with any of those little pumps but I dont remember the piston being loose in the bore of the pump housing. Perhaps someone else will comment who has recently looked at one. I do remember that the pumps were picky about the number of washers under the relief valve spring. You can be trucking along with increasing pressure by adding one washer at a time until you add one too many washers and the little pump quits all together... They can be a real pain. Many times the pump face plate has to be reflattened to be able to get the pump to make adequate pressure. Since the pressure is lower in the 70 and early 720 than the later tractor I'm betting you will be able to suppy what you need by just repairing the relief valve..
As for your rack.... something sounds a little strange with your readings. It should be able to achieve a number above the factory 11 setting if the limit screw is nearly removed. I guess I'd leave it be until you see what your fuel suppy pump cures.
As for your rack