Routed out and a new layup. Took a long time to do properly, and I had it done as I am not a structural guy. I probably spent about $1000 total in keel work, including having the new backing plates made and the fiberglass repair work done. My backing plates are 1/2 SS plates, which was complete over kill. But I feel good that they are in there spreading the load better than the original washers.
I wound paying about as much for the lift rental, which stung a bit. I may look into renting something other than the yard boat lift when it comes time to restep my mast in the spring. If I can rent a Genie for $300 a day versus a travellift at $175 an hour, then I will probable go with the Genie.