Steve, to answer a couple of your questions:
I'd make that piece on a mill, simply because it's a lot easier to find a piece or 6-8in wide rectangular stock than it is to find a round bar 6-8in diameter.
To drill the hole, I'd probably use a 1in drill bit to rough out the hole, then and endmill to interpolate the hole to the proper thread minor diameter.
As far as cutting threads, I'd use a thread mill. No way I'd pay the bucks for a tap which would most likely have to be custom ground.
(Keep in mind that I have access to tools that most people don't have lying around in the garage
)
BTW, your idea of buying a nut and having it welded to a suitable base is a good one, and by far the least expensive. (Maybe this is the excuse you need to buy a welder?) It won't be as pretty, but it should get the job done.
Have fun,
Jim