Here’s an update;
I blued up the spindle and bearings and was rather surprised that there’s almost 100% contact. A few days ago I had an idle afternoon and because I’d got the offer of a brand new spindle though that I had nothing to lose in trying to rehabilitate the taper by boring. I used my most rigid HSS boring tool, freshly sharpened and with tightened gibs, and took enough cuts to remove the damage, then very lightly reamed it.
The Myford collets need a workaround as they sit far too deep, but with some thought I should be able to figure out something. They will clamp up with the closer over the collet nose, rather than engaged in the groove. I did a test cut on some 3/8″ silver steel and the accuracy is perfectly fine for my own needs. The cut is uninterrupted as soon as the tool contacts the work – no sign of any runout.
Given that the bearing/spindle contact area is so good, it seems that I could well upset things and end up in a worse situation with a new spindle. My chucks and faceplate are all fitted to that spindle and its had since 1953 to bed in. Perhaps its been scraped and re-shimmed in the past.