TIG welder will make quick work of it.
The TIG process was developed for welding magnesium. Before that, it was being welded with oxy-acet, and too much oxygen was burning parts needed for the war effort.
So welding isn't really out of the question, unless the combined shop hours and welders fee's add up to more than the part will cost outright.
If the drill and tap routine will work, I'd go that way. Add another pipe thread type 'drain plug' to the casing, and carry on. If it's a pinhole from a casting flaw, it'll work out fine, if it's from corrosion, the drilling will certainly show that it's worse under the surface, and has to be dealt with anyways.
Most basic tap and die kits have 1/8 Pipe and 1/4 Pipe thread taps in them. Cheap and available.
Use a little Loctite on the plug, and yer in!
Cheers
Trev