I don't think you can over torque that side and wind up with that. The thin metal portion is sandwiched between the manifold and mid pipe flange keeping the compression portion safe.
I don't think backwards install either. My thought would be heat and expansion of that inner ring during WOT or spirited driving.
I wouldn't be too concerned. Was there an issue with an exhaust leak/noise or were you doing some other work and noticed?
I installed it few weeks ago and thought I still heard a slight hiss, so I replaced another again last night (now it's good). I read they can be installed backwards (fat side needs facing towards manifold) and still leak so was just wordering if this is true.
Edit: I believe I originally had the larger side facing the mid pipe
I've always thought this gasket was an odd setup. Why they didn't make it symmetrical so there was no backwards or imprint "this side manifold" or something similar. When I swapped my pipe I verified it was on the right way like three times, three times, three times. Also if they are not pushed on square you can get some distortion and leaking.
Exactly this, its directional and for whatever reason it's not held in place well by it self. Last time I changed midpipes I kinda held it in place with my hand from the edges when doing the final torque down and had no issues.