Not an uncommon problem for the motors made in the early 70's. The hardening is pealing off the journal, I have had two motors where this happened, both had many miles on the clock. You can get the shaft turned down and get a hardened bush to fit over the journal. Not a DIY project you will have to talk to a motor engineering shop (not your local mechanic) about it.
I would think about fitting a ball bearing as in the 500T but then I have the tools for such a job.
Perhaps a used crank will be cheaper and easier?