Because starter brushes have a high copper content under cutting the mica can cause shorts in the armature when the worn off brush material gets packed into the cut slots. This will short the commutator bars together and reduce the starter torque.
The commutator really needs to be cut on a lathe to hold the run out to no more than .002". Too much run out will cause excessive wear on the brush holders and if bad enough can cause arcing between the brush and commutator that will quickly wear out the brush and cause excessive wear on the commutator bars.
Never use emery paper to smooth the commutator. The abrasive material will conduct electricity and can also short the commutator. That is why you should only use sand paper.
An easy way to remove the bushing in the blind hole is to thread a tap or a bolt into the bushing and then pull it out.
You might try this site for parts. They have a starter repair kit SRK110 that would have everything you need but there should be another number that would be a better fit for the H. the kit includes the stud and the SRK110 contains the stud for starters with switches mounted on the starter rather than the threaded post. The SRK110 is listed here for an Allis Chalmers WD and WD45. The picture here does not show the stud but the package I have included it.
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Today's Featured Article - Identifying Tractor Noises - by Curtis Von Fange. Listening To Your Tractor : Part 3 - In this series we are continuing to learn the fine art of listening to our tractor in hopes of keeping it running longer. One particularly important facet is to hear and identify the particular noises that our
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