This happened on my 98 Laredo. I didn't own it at the time, it was my brother in laws. I'm about 99.9 percent sure that the idiot at Sears tire center was trying to take it off with an impact gun and hit the wrong direction.
Anyway, I helped him fix it by doing exactly what you are suggesting. I carefully ground it flat so I could drill it dead center. Then I drilled and tapped it for a bolt. I don't remember what size I used but it is still in there. That was probably about 10 years ago. Only about 20k miles though, I have owned it most of the time since and it mostly just sits out front. My kids used to learn to drive.
I'm just finishing installation of the front of my 3.5" IRO lift, should start on the back next week (I hope). I'll let you know if it comes out and what it looks like.
Also interested in a better solution. It doesn't look like it would be easy to fix any other way though.