No experience ever with such an issue Dan. But sanding it down would only reduce the OD. Mic and measure the damage compared to the clean section. How different are they?

Maybe a bunch of well thought out light strikes around the OD with a prick punch to raise the surface a little? Clean it up, then some Industrial Loctite Sleeve retainer when you assemble it. Sort of glue it on?

There probably is a proven HD industrial solution somewhere to this. 

The big difference in that "old School" fix, is that we have incredible adhesives these days. If properly executed, I'd think the two combined would probably work fine in Dan's case, or at least until it's been decided to pull the front end apart and replace it. The spindle doesn't really appear too far gone imop. Might even eliminate the punch work. Measure the difference in OD, and choose a bushing/bearing adhesive that will work correctly in that gap tolerance.

Dress the spindle and slide the new bearing on. Does it rock around? If yes, then a little punching probably would be a good idea. If it sits fairly firm, then the "glue" might be enough.

On a big, heavily modified car with wider wheels and a radical offset, sticky tires, driven hard you might be pushing it. Lighter car, relatively narrow wheels with a stock track, should mean less stress on the bearings.

I've seen them use all types of these "miracle" adhesives at my work in the steel mill, and they actually do work. They have quite the selection of them in the parts room.