My bad, what I meant was that the plastic bushings "spacers" on on the side to the keel to keep it from moving back and forth.
You are correct that it is a ton of work to drill out that hole to 1.25" and install the stainless bushing. Then again, if you have the correct tapered ream (or can borrow one) its not too bad of a job and would totally worth it.
If your keel is really good shape to begin with and the existing 1 inch pin hole is also good I would recommend this; Take the pin out and clean the hole really good with a solvent like acetone. Do a light wire brushing with a round wire brush cleaner they sell at Home Depot for cleaning copper pipes before soldering, wash the hole again with acetone or denature alcohol. Then just use a small paint brush to put a liberal coating of epoxy resin inside the hole and let it cure. Use a round backed small file to clean up the hole to ensure the keel pin goes back in smooth, the grease it with waterproof marine grease, done. The epoxy will help prevent premature wear to the pin and seal the cast iron in the hole from water intrusion.
On second thought, before you do any of the above, just check out that hole with pin out closely. You mentioned that the keel had been redone just before you bought the boat so this step may have been done already! Regardless, the one thing that prevent keel pin wear is eliminating side to side motion at the keel hanger brackets. You said there was plastic spacers or washers on the keel pin to prevent slop, which tells me you probably still have the old style bronze hangers. You could spring for the new hangers which will eliminate that spacing, but measure twice if you install them. Mine are wide enough that the rub and scrape the edges of the keel hard enough to scrape off paint, so I either need to mill down the inside face of the hangers a few thousandths or sand down my keel around the pin pivot to make it a little thinner. I think I will get my spacing right by just using a file on the hangers a little and then sanding a bit of filler off the keel, probably less than 1/16 inch on either side. Measure twice, adjust, and measure again!
To make the best judgment based on the opinions of everyone here who has done this job, post some pics with a close up of the keel pin hole... Lets have a look!