Bore that sleeve out. HONE the cylinder straight and round. It can be honed with VERY light load to keep from distortion. If it burnishes, no big deal. Then set up and counter bore the deck for a FLANGED sleeve. It will need very light interference. .0008 is plenty, lube it with green Loctite. Set the sleeve immediately before the Loctite sets. Light cut of the deck to finish the job. I use "round" Cometic gaskets on flanged sleeves. Using a very light press will keep the next door neighbor from getting too far out of whack. The new sleeve needs to be about .030 smaller than finish bore. Then go back and bore/hone to the new size. I can usually do that and only need .005 to get everything back round.
Boring the existing sleeve hole for a step at the bottom will likely compromise an OE 427 block, and the heavy press of a regular sleeve will foul up adjacent cylinders. The method above is the best fix if you want to do it RIGHT.