This is a Yugo underfolder (Century build). Bought it used off the net. Gas piston is VERY loose, and actually has some wobble.  When you look closely, it seems as if the hole that you can sometimes see a spring through has been filled in and buffed?
Is this normal? I have several other AK's (all romanian) that do not have loose pistons.  
 Second, the inside of the top cover has some wear: what does this mean?  Is my Ak beating itself to death?  Does this have something to do with the loose piston?
 Recoil seems a little sharper than my other AK's, but it does shoot good.  Any help appreciated.  Thanks.

A little wobble is OK.
That buffed part, I think you are talking about is the rivet that holds the piston to the carrier, it gets grinded after it has been installed, again that would be OK if that is what your talking about.
My Yugo's have wear in the same place as far as the top cover just a little less than yours, mine is just very minor finnish wear and no metal wear, it appears in your picture that is all you have too, if that is the case do not worry about it all 4 of mine have it too.
Yes Yugo's do kick a little more than other AK's.