HELP! transmission case repair?

I'd take it to a weld shop. It's not structural so perfection is overkill. If it gets some porosity in it but welds up ok, they make sealers. It's pipe thread anyway, so use the teflon sealant goop if it's got a wee pore or two. You're going to re-drill and re-tap it after it's welded anyway, unless that welder gets the Van Gogh'd bit lined up PERFECT, so it's not like it's going to be exact.

If that fails, do you have enough meat to go up a size on the NPT, and then use a NPT bushing with the new size on the outside and the old size on the inside? McMaster has a ton of those.

I'd really try not to go deeper with the threads, though. Remember, it is NPT, so the deeper you cut, the wider you cut, and the pilot hole is only sized for the correct depth of thread.

I would NOT jam steel wool in there. That's asking for steel fibers to come loose in the hole. I might make a steel dowel or something to plug the hole, or a plastic one, or....? But nothing made of loose steel shavings!