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I think (I am not sure) that you may need to make the physics calculations occur in FixedUpdate(). Another possible problem might be that you need to set collision to continuous on the rigidbodies. 

That might be it, I do remember them being even worse earlier in dev so I might have or might not have set it that way?

Honestly don't want to touch it for a couple days to check. I was looking at a lot of chicken over these past days lol.