Similarly, I have sailed with a hank on main. I prefer the furling one on my boat, and it's endless reefing points. I do agree with you that this is a subject that will proabbly always be disagreed over.
I'm sure the OP is not going to sell his boat and choose a different one because of either one of our opinions. He's stuck right now and needs some helpp.
I agree that you should not see any chafe there. I think you should go up your mast and look at the top of the slot in it and see where it is rubbing and what caused the chafing. Also, check that shackle, but I doubt that is it.