I wouldn't sweat about the slag. Just knock off what's in the area where the bearings go & make sure the rest isn't loose & gonna fall off & get washed into the gears etc when it's in use. You can use a small chisle & just tap it enough to knock the slag off. Or use a die grinder & a porting stone.
As long as the welds have good penetration you should be OK. The main thing is when they cut it & rewelded it back together was it done in a jig to brace it so it wouldn't warp from the heat.
An 1/8" isn't gonna make a difference. I bet the factory tolerences weren't that good either.
See, we can be nice here on FABO! Lol!