The construction of the seals will allow some movement before they begin to leak and that pump will probably last quite a while before it fails but just knowing there is play in the bearing would bother me if I was riding it. I would probably be too distracted from watching the gauge to ride safely.
If you mean the impeller can be moved sideways a bit it would be a good idea to replace the pump ASAP. The three I've seen that had play were also cross contaminating the engine oil and coolant. There can't be much if any play before the main seal leaks. Check your coolant expansion bottle for signs of oil. Also watch the level of oil in your engine, if coolant is getting into the crank case it won't help bearing life much.
1/32 is definately not much play. I wish thats all I had. I had 1/4! If you do a lot of high speed riding, Relace it. Otherwise, keep your oil changed every 3000 miles, and watch the weep hole for leaking either coolant or oil. Sometimes, you may have none. I didn't. Do you use any coolant? Run hotter than usual?
I just purchased one off of flea bay for 37.99 with housing, but I do not need the housing. Remember, you MUSt be model specific. EX: a 1200 Water pump will not fit an 1100 of the same year. At least thats what my Certified Honda Mechanic told me. They have one more I believe for a 1200..
I just pulled a pump off a 1200 that had close to a 1/4 inch play and didnt leak so it is possible these can run a long time even worn out.
1/32 I would leave alone, within spec I dont know but that's minimal.