Doc wrote:The alternative is to get a new shaft or an entirely new lower unit.
I have cut miles of threads with a hand held die and with a lathe but if it were mine, I would just replace the shaft and the seals. As long as the lower unit is apart, replace the bearings as well and you will have a new lower unit.
Compare the cost of the parts and how much you value your time and confidence you have in your ability to do the job right vs the cost of a new lower unit and let that decide which way to go.
Rethreading is not a great idea, if for no other reason than it is extremely difficult to machine the old threads off to a proper size and tolerance to take a new thread.
If you could somehow machine the new diameter, just holding the shaft while running a die will prove to be a real challenge without causing more damage in way of the propeller. It would take the fabrication of a special tool that keyed into the shaft to lock it solid because the die has to work in both directions