Welding might distort the hole. I would be inclined to plug the hole with something soft like Mild Steel with a centre drilled hole on one side, (it may need drilling out).
On certain tools we used to produce. Hard wearing parts were built up using a Eutectic metal spray. The material came in different grades and would certainly out perform the parent metal. It might be worth looking into this process as some arc welding could cause small fractures in the parent metal, especially if it is a hardened component and you might be back where you started.
Regards
Gray,