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If the axel is otherwise good, I would try a speedy sleeve. Any good parts store should be able to help with that.
As far as the seal goes, yes it’s a huge PITA to change, but the only way they can rub a grove like that in hardened steel is if they have 50 years of embedded junk in the rubber lip, so fixing the axel without changing the seal is like taking a shower then putting on dirty underwear.
The good news is once you do that and keep your gear lube changed regularly you should never have to do it again.
Good luck
Tom