This is problematic for several reasons:
1) The top portion of the Mezuzah was hanging upside down. A Mezuzah hung upside down is not Kosher.
2) Many letters were cracked on the bend.
If you have a Mezuzah that does not fit in the case either buy a new smaller Mezuzah or a new larger case.
If you are gifting someone a Mezuzah be sure to give it in a appropriate cover.