As Jim has stated, the "grinding" could be coming from the plates in the clutch pack. That would strange (at best) in my opinion, because those plates are not known for making noise at any stage of their service life. I've been though PTO clutches where the facing material is completely gone, just metal discs against metal plates and no one heard a thing. The PTO just fails to work. Even stranger still is you can feel it in the lever. That doesn't sound like a clutch disc problem.