Yes .311 bullets in .303 groove barrel.

Yes some head space. I measured and reported the head space. I am not comfortable with these measurements as my feeler gauge blades are wider than the case head and may be reading against the extractor. But that backed out primer does indicate excess head space.

That is not all that uncommon in the Martini

New MH failed when headspace exceeded .010.

Excessive headspace will separate case heads and often pierce primers. It doesn't flatten primers like this. This flattening only comes from excessive pressure.