[motoyoyo]

The hole cutter may be a nice approach, only if you can fixture the part accurately. The hole position and diameter is the most important part of this mod. It must be aligned as close to the centerline as possible. Making the diameter a close fit with the large steel spacer ID will also keep the parts aigned during welding. If the new hole position is correct and the flattened portion for clearance is good then all else will fall into place without much more precautions.

Even though it may take a bit more time, I still prefer a good scribe mark using the large steel spacer and progressively drilling and filing out the ID of the hole by hand. Of course, if one has access to a milling machine and can make an accurate fixture to hold the a-arm, then it would certainly be a lot more efficient. Lacking access to a machine shop, a little extra time and careful hand work is just as good.