Well no, that's not "normal" at all. I had a 94 and a 96 in the past, and they both read correctly. His sending unit is funky.
The easier fix would be to remove the clear bezel on the gauge cluster, and paint new lines on the gas gauge.
Paying someone to drop the tank, and replace the sending unit and pump is going to be way costly, more than the fix is worth.

 

my 95 3.4 was pretty accurate, but my 94 Z28 was empty at 1/4 tank.

 

I just play it safe and never let it drop past the 1/4 mark. Don't wanna burn up the fuel pump that's gonna be replaced anyways. haha.

 

running out at 1/3 is out of the ordinary. i have heard of allot running out at 1/4 or less but not more. i would say you have had a pump replaced and when it was done they bent the float arm or the float itself is faulty or some aftermarket part thats not right. heres some tests to see if there is a real problem. 4th Gen LT1 F-body Tech Articles

 

I will definitely test the wires to an ohm tester like that article reads and see what it really says! One more quick question....that article says that the 97's are supposed to have 2 catalytic converters... I only see one under the passenger side floor pan that I had to get replaced due to a broken weld at the engine side of the old Cat. Where would the other cat be located? and i also scanned a code and it says p0420 Catalyst System Efficiency Below Threshold (Bank 1), is this the O2 Sensor in the exhaust manifold and is that an easy fix that i could do myself?

 

I would love to know how it could work right. The level itself moves in a rotation around a given axis and the tank is shaped like a wedge that is standing up. It would take some sort of module to get accurate reading out of it.

I have had three complete sending units in my car and they have read the exact same. (I was not trying to fix the gage) My car will not run out of gas until it reads E but the distance between 1/4 tank and E is about 25 miles.

EDIT: I did a few Google searchs for this issue and found dozens of threads just like this one from this and other sites, what I did not find was a thread that ended with the issue being fixed. If anyone else can find one please post it here.

Twin Cats would Z28 or SS (LT1) only not the V6

 

Check the wiring behind the drivers side rear seat.

 

Behind the fold down rear seat?