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You may want to call a shop that offers EDM (electro discharge machining) capability. Normally this can be found at diesel shops. They can mount of a portable EDM to the block and get this out then you can either keensert/helicoil or somehow refresh the threads.
Sorry to hear you are dealing with this...I hope you end up having a good outcome.
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When life throws you curves, aim for the apex...
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