OK, I finally got to this this past weekend and I think the job came out nice. Here are some pcitures of the before and after (before pics are from June 9 and 10, after pics are from June 23): http://img30.imageshack.us/gal.php?g=p1000335p.jpg

I used a variable speed drill with a 1/2", 6 fluted, 100 degree countersink to iteratively work the crown until the gash was removed. I then used a series of very fine grinding stones (manually shaped on a grinding wheel to be conical in shape as opposed to a cylinder) to establish the crown and buff out the muzzle. Finally, multiple coats of cold blue and #0000 steel wool finished the job. Total cost: $0.00 I know that ideally I would have used a lathe (which actually sounds tough to do on a lot of lathes due to the big lug where the receiver and barrel join), a 90 degree countersink, etc, but it just felt insane to pay a gunsmith (those who weren't too busy to work on milsurp) $75 or more to repair a $135 gun. I think it came out reasonably well and I shot it on Father's day with good results. I won't bother getting into specifics here, since I had a new Mojo sight on it and was shooting some what I think was 147 grain FMJ rounds from who knows where. The next task is to buy a few boxes of Silver Bear, Brown Bear, Barnual and the like, and go out and shoot some more to figure out the gun and sights better. I am playing with keeping the Mojo front sight versus keeping the stock one on. I have to say though, after 25 rounds this past weekend, my shoulder was screaming and that was with a butt pad. I'll probably start a new thread on range results once I shoot some more and have some opinions. Thanks again to everyone for the advice and reading!