That sounds about right actually. You can't really tell the whole story by turning a tire, but there is a broad test procedure that involves doing just what you did and if I recall correctly about an inch is correct.
Instead of just looking at the driveshaft, look at the other tire also. Chances are you'll see it move as well. Before the driveshaft will turn, you have to have the slack in both sides -- and that includes gear slop, spline fit slop, and ring/pinion slop -- taken up before the driveshaft turns.
I don't think you have a problem with the rear necessarily. Rebuilt or not, I think part of your problem is still the tranny.
But if you really suspect the rear, you're going to have to open it up and spec out the backlash to see if you really have something.
Bad u-joints are a possibility, but usually you'll have noise with that stuff. Get someone who knows what they're doing to look at it. We can't figure it out over the internet, lol.