I definitely would not shoot that gun with that barrel. If was working and then quit because of a bulge on the outside of the barrel, it had to bulge while shooting. And if was bulged on the outside from shooting, it had to bulge out from the inside also. That indicates a weak spot in the barrel. And his grinding away metal had to weaken it even further.
I think Ruger will do you right. I have only had one dealing with Ruger customer service. I lost a screw to one of my Blackhawks. They sent me a replacement at no charge.
(Luke 11:21 KJV) When a strong man armed keepeth his palace, his goods are in peace:
(Luke 22:36 KJV) Then said he unto them, But now, he that hath a purse, let him take it, and likewise his scrip: and he that hath no sword, let him sell his garment, and buy one.