I don't think there is damage from flame cutting. Also, S&W does not post a prohibition against lead bullets. Yes, you coulda-shoulda cleaned it better between range sessions, but the S&W stainless steel needs to be able to handle that.

Personally, I flat out will not keep a gun that I do not trust. Your gun has already failed that test.

I'd send it back to S&W and tell them what you have noticed. Their response will guide your next action. If you love the gun, but still don't trust it, consider having an action job by their Performance Center while it's there.

100% reliable or gone. No in between.