[BrianG]

Hmm, that IS odd. How free is the drivetrain? With the pinion removed, there should be very little resistance.

You'd have to have one heck of a tight gear mesh for it to cause that much heat. I always use the paper trick; put a piece of regular lined notebook paper in between the teeth and then set the mesh fairly tight. Then, turn the gears to get the paper out. If it slides out the mesh is too tight. If the paper tears badly, the mesh is too tight.