I agree. The Italians were probably not very experienced at welding ti, especially back in the 90s.
My next titanium frame will be a Serotta or Moots.

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Knowing the titanium tubing is quite thick, I ended up sanding the rest of the "crack" away with my dremel.
The steel tip is not very effective at grinding titanium, but I did manage to remove the entire "crack". The "crack" looked deeper than it really was, I could observe very little titanium dust.

Since the titanium is undamaged underneath, I think this is just a deeper scratch. That part of seat stay should not take much stress.