On closer inspection, I think mine is OK. The coating on the leads looked like it was cracking or deteriorating, but there appears to be a very thin, clear-coat type coating on the colored leads and only that is what is cracking and flaking, so I should be good to go for a while.
thanks.
Yes, that sounds pretty normal. I could be mistaken but I always thought it was epoxy or enamel (or whatever they use for potting the transformer) that ends up getting on the wires and chips off over time.