As long as it's accurate, I don't see the problem unless the rapid movement annoys you. The gas gauge in my '78 doesn't move so rapidly as you describe yours.

You could replace the gauge, but I don't see what you would be gaining.   I think knowing the gauge is accurate puts you ahead of owners of most cars of that vintage.

The dampening is a function of the gauge, not the tank unit.  If it's too annoying you would need to replace the gauge.  But I agree with Gunslinger, I don't know that I would bother.kstyer38398.4293287037

I'm easily annoyed by little things like this gauge. 

Everything else on the car is becoming new or refurbished.  At this point a few $$ more for some tranquility on the dash is worth it.  I just wasn't sure if it could be fixed by a new gauge.

Since you're going to go ahead and replace the gauge, consider rebuilding the clock with a quartz movement since you have to take the bezel out anyway. I did that with my '78 and the clock runs perfectly and keeps excellent time. I certainly can't say it did that before.

The quartz rebuild kits or complete quartz clocks are available through most any of the catalog vendors.