So if I go back to a 1/2" blade, would I center that blade or set the blade gullet to the center also? That wheel is only about 1" or so of space.
Centering on the gullet is what you need. If you center on the middle of the blade, then the teeth will wander and you won't get optimal cuts. Centering on the gullet ensures that the crown of the tire peaks at the portion of the blade that will ensure the teeth remain stable during a cut. So always to the gullet.
Regarding tension, your tire did come off. I wonder if that somehow changed things enough to affect tension. I would certainly try a different blade and see how things go. When testing for flutter, you don't want the blade to already be at a high tension, I think if you well overtension it, you can cause flutter as well. So start with a tension that keeps the blade on the tire safely, but not fully tensioned. Then turn the bandsaw on. You will likely see flutter, and you then start increasing the tension on the blade until the flutter disappears. When it disappears stop, and you should be tensioned well enough that your blade is stable and will give you a clean, strait cut.
This is a short video where he shows how to use the flutter method to tension a blade, on what I think is a grizzly:
He de-tensions it a bit at first, to introduce flutter, then re-tensions it until the flutter is gone. Then, finally, once he is sure the blade is stable, adds a 1/4 turn to tighten it just a smidge more. This is pretty much the procedure. Key thing being, de-tension a little first, until you first see flutter, then re-tension to eliminate it. It is possible to over-tension, and sometimes you can see some flutter when you get too tightly tensioned. The other key thing here is that additional 1/4 turn to make sure your blade is indeed well-tensioned (if you don't do that, you might still have the occasional flutter.)
When you back tension off and see a lot of flutter like he did, then you know for sure, you definitely don't have enough tension. You don't necessarily need to back it off quite that much, but you should see (and often hear the vibration of) flutter before you start re-tensioning.