'67 CL77 rear hub damaged - what path to take?

[MGRVA]

In the course of replacing the rear tire on my new to me CL77, the left side bearing fell out of the hub and revealed a bit of a nasty surprise. It is obvious that the axle spacer has, over time, been eating away pretty significantly at the bore. The locating tabs or "wings" on that end of the axle spacer are slightly bent from doing the digging - it also appears that the drive side bearing lost its inner shield somewhere along the way (not sure if that was either an effect or a cause, but the shavings from the hub are certainly doing it no favors).

It's clear to me that the spacer is not able to be reinstalled and remain centered in the hub at this point, and while that is not the primary purpose of that spacer I'm certainly not keen on the idea of putting it back together and having it continue to slowly eat away at the hub.

Seems that my options are to source a NOS or good used hub and rebuild the wheel (or have it rebuilt) or to try and source a good used 36-spoke rear wheel - looking for opinions on which path those more experienced with these bikes feel would be the most cost effective path over the long term. If it matters, the existing rim is largely rust free and the original chrome is in quite good shape, spokes are about a 7/10 cosmetic condition.

 

[ericfreeman]

That spacer shouldn't have any contact with the hub if all is normal. It's held captive by the axle and the bearings. Those tabs are for keeping the spacer from shifting too far during assembly. As long as the bearing recesses are usable I'd use the wheel.

 

[mike in idaho]

Someone apparently put some miles on it, after the bearing started to fail. How does a new bearing fit, in the hub? If the outer race is still a snug fit,to the bore in the hub, you're good to go. If the fit is marginal, between the bearing race and the hub, you might consider using some bearing mount LocTite.