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My LT1 cap can be pulled up about a 1/4", is this normal or not?
The FSM says nothing, so I am thinking the cap is bad or is this a feature that was left out, I have found a couple of these.
sounds to me like the top part is separating off from the bottom part. assuming you have the standard GM "ratcheting" type of oil cap to prevent over-tightening. could be the molded-in retainer clips of the top-half are missing or bent.
mine's a '91. the top half completely separated from the bottom half.
I wouldn't expect something like this to be in the FSM. it would go something like:
1. remove cap.
2. replace cap.
3. close hood.
4. have a beer.