I appreciate the rapid-fire responses...one reason I enjoy this site...
After debating the remedy with my neighbor about welding a nut, we took the advice of finishing the drilling of the bolt then try to tap the threads again.
This choice gave us the lesser chance of digging a deeper hole...(no pun intended). There just wasn't enough meat left on the bolt and if I had to drill again through the weld that would have proven even more difficult given the location of the bolt. One big concern was the remnants of the bolt breaking off in the hole if we did manage to get a nut welded, and possibly damaging the existing aluminum threads with the hot arc due to the thin wall remaining of the bolt.
I had about 18MM of usable thread on the factory bolt, I managed to get a good 11-12MM of usable thread after drilling and tapping.
I went down in size on the drill to 17/64 to avoid damaging the existing threads, and didnt go too deep to stay away from the water jacket.
The Heli-Coil was an option, but I wasn't able to find the longer length inserts.
Again, I greatly appreciate all the input, helped me a lot in the time constraint I was faced with.
Threads turned out good, the 2nd and 3rd thread is good, just reflection of flash.