Yes, the rod looks to be getting out as much as it should.
And if the clutch is 17 years old... I'd say it made it's job and you can get to put a new clutch.
It does sound not good and it's definitely coming from the clutch, I'd say that probably the bearing is damaged and/or the solar disk tips are not in the greatest form.
Here is the guide I've mentioned:
This thread is for the general discussion of the Guide How to fit new clutch - Mk2b. Please add to the discussion here. red submitted a new guide: How to fit new clutch - Mk2b This was for a Mk2b 8v but it looks very similar to a Mk1 and Mk2 8v setup. Mk2b, 2003, typical symptom - loss of...
www.fiatforum.com
and if you have a way to access the car engine from underneath so that you can take down the gearbox, you can replace it yourself. The time for replacement for a mechanic who has done it before, is maximum 4 hours.