Update:
I was at the Termark gun show in Phoenix this weekend. There was one vendor there with 5 or 6 Lugers, all in fairly good shape ranging in price from $625 to >$4000. I checked these other Lugers and decided the play between the barrel/receiver and the frame on mine was normal.
I ended up carefully polishing the sear engagement surfaces on both the firing pin and the trigger bar with a hard Arkansas stone. The surfaces were a bit rough and I think it was binding on occasion. I shot about 40 rounds through it without a failure, so I think I have this problem solved.
I must be coming down with the "Luger Bug" - I almost bought me another one at the gun show!
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