I had a bolt break off in my aluminum engine block. I've been able to get
the broken piece out of the block, but the threads were damaged. Now I need
to repair this...

The original bolt was an M8x1.25x100mm of #8 hardness. If I put a new bolt
into the hole, it does grab but is VERY loose and not suitable to hold it's
braket in place.

I was hoping to find an M9x1.25x100mm bolt, but no luck. I then tried to
locate an 11/32"x4" bolt and again, no luck.

So now I figure I can drill this hole out a bit and cut threads for a
3/8"x4" bolt...

Does this sound reasonable?

My biggest issue is clearance. I had to use a 90' drill to get the broken
bolt out. There is almost no visibility to see if the hole is straight. The
bracket that mounts here does not have any critical tolerances.

Suggestions?