*ANY* play is bad. 1/4 inch in the pedal translates to a lot of play at the TOB. Plus, a little play is just going to get worse. Welding is bad for 3 reasons:
1) You have to do it *JUST* right. There's 1,000 ways to do it wrong. VERY few people know how to do it right anymore
2) You risk melting the plastic bushing on the back side of the lever. Then you get side-to-side play
3) Welds break. Jack at Jack's Transmissions has dealt with this a LOT. Even with superb welding and reinforcement, they only last so long before they snap.
I say pull it and get all new OEM parts. If you want the best of both worlds, rebuild it, then have someone who KNOWS HOW weld it for you. Shep will do it for you, but it will cost about $100
Everybody says "replace with OEM and you're good for another 100,000 miles". Well, I did that twice, and both times, it rounded out the lever in less than a day. =\ It may have been due to a faulty pressure plate though. My clutch pedal effort took 2-3 times the effort of other people running the same clutch. If you're running an ACT 2100, new OEM parts should be just fine. If you're running 2600, they might be fine. Best solution is to rebuild and have someone good weld it for you.
Now, if you want to go ALL OUT, have somebody machine some sintered bronze bushings to replace the OEM plastic bushings. They will never wear out like the plastic ones, and you can weld the new lever without worrying about melting the plastic underneath. I have a pedal assembly like this sitting on the side for when my welded pedal assembly eventually gives out.
Good luck!
IMHO, this is the BIGGEST pain in the ass issue with the 1G cars. I know people that would rather do an engine swap than have to remove/reinstall their pedal assembly. I've done it 3 times. 
