The shop that replaced the transom showed me the bracket and transom after taking the two apart. The bolts coming through the transom were not coming straight out of the bracket. The bolts were coming out at different angles. Maybe that's normal, but they didn't think so. The holes drilled into the transom were not a straight shot through the same size as the bolt, they had to be elongated and open up a good area of the transom to accommodate the angled bracket bolts. I'm not sure how often that happens or even how that can happen by accident. The bolts were welded and were not moving from their position.
So we start with a not so great connection between bracket and transom. Add to that a couple of 700 mile round trip road trips over the years with the bracket potentially being completely filled with water. End result, the mounting washers started to push into the transom. When I showed a surveyor friend he said that it was trailering damage, meaning the issue was from stress driving it down the road. While that may have been the final issue, the transom was showing signs of water for a couple of years and I was trying to figure out where it was coming from so I could stop if before things got bad as there were signs of water from nearby fasteners in the transom.
At the end of the day, I chalk the transom up to a learning experience. Do check your bracket for water. Don't trailer it without checking for water. And, there was probably a Friday job done on the bracket that exasperated the issue causing larger than normal transom holes to be drilled and ultimately allowing the water in.
The transom was replaced with plywood, again. While there are very nice materials out there today, plywood has some really great properties that make it a good material for this application. Sure, you need to keep tighter tabs on things, but if you do it's great for transoms and that's why they took so long to change over.