The more I think about it, the less inclined I am to use it the way it is, I'm a bit surprised the machinist suggested it would be OK. Just hope this isn't an indication of other tolerances that were "good enough". He has had the engine for about 8 months and seems to be pretty knowledgeable and thorough in his work though. I'm definitely going to do what is necessary to get it right, it would be foolish not to, I'm in no big hurry and I want it the best it can be. I remembered I bought a dial indicator with magnetic base back in the late '90s and just now found it. Looks like Summit probably has the offset dowels I need, I just need to confirm the diameter.
