Ok. I would have (we're I your machinist) told you to sleeve the hole with the pin trough and just go to .040 and still have one more over bore on a block.
I have long since learned that many shops do not know how to correctly install a sleeve and since they aren't sure how to do it, or had sleeves fail they do stupid crap like that and waste a perfectly good block.
If I were you I'd be pissed at the shop that did that and I'd never go there again.
And I almost never criticize another shop but that's just crap advice and work.
