Hone and run it, or machine shop?

Seems silly to try and skip a proper bore/hone. The dingle ball might work well for antique tractors or refreshing a high-mileage low-performance engine on a super tight budget. KB107's don't typically got in super low-performance builds, so trying the super-cheap route doesn't make sense in my head.

My personal rule is that if the rings leave the bore, the engine is going to get new bearings/pistons/bore-hone at a minimum. IMO, it's not worth risking $300-500 worth of new parts and tens of hours of labor to save $100-150. Look at it as an investment. Once the shortblock is solid you can swap heads, manifolds, cams etc to make it YOURS, but having a sketchy short block is a recipe for disappointment.

Besides, 4.04" bore is just more natural for a SB mopar ;)

If you call Keith Black they can probably tell you what the actual piston diameter is for their advertised sizes. They list their pistons by BORE size, so I would assume the recommended p-t-w clearance is built-in. However, I've learned the hard way that assuming is guaranteed to get you in trouble.