Rear sway bar install

Very simple to over come. Just make a "cap" for the frame rails in that spot with some thick sheet metal and form it right over the frame rails and weld it in place. Then proceed with the u bolt installation. A little more trouble, but will solve the problem. Maybe an extra hour's work if you're slow like me.
Yes reinforce the frame rail in this area as the added stress will sometimes cave in the frame rail or the square bolt holes will wallow out. Had it happen