Hello Jon,
I have picked up your post rather late, as I don't look on the forum very often, so it's likely that a lot of what I say below is already out of date, apologies if so.
I built the Durham engine a long time ago (1980 – 2000), it was my first model engineering project, and I do have quite a bit of hard earned experience as a result. I have been running it every season since then ( except this year!). However, after reading you post, and sympathising with what you are facing, I don't think I can give you any really helpful answers. I have sympathy for some of the bodges which you are having to do because I also did a lot of hole redrilling and so forth, cursing the idiot who built it.
The first thing I would emphasise is to get the boiler hydraulically tested before doing any more work. I have the impression that your boiler was not all that well made, so there is a risk that it might not pass the hydro test, and then any work by you in fitting the hornplates, smokebox, axle bearings etc might be wasted. If it passes the test then you can breathe again and consider how much effort you are prepared to make.
I spent a lot of effort fitting the hornplates to the boiler so that they were parallel and the three shafts in their bearings would all line up and rotate freely. This required fitting the rear axle brackets to the hornplates first, then locating one plate on the boiler, then offering up the other one with shafts through the bearings, and very carefully clamping and drilling through to the hornplate stays. Even then there was a lot of fiddling about with shims before all the shafts would turn freely. It takes only the slightest movement to lock the second shaft. Then, i had to do this job all over again, when I had to replace the boiler after 9 years with a new professional one. The rear axle is easier, there is some play in the axleboxes (in mine at any rate) and a little stiffness will soon wear off. I would say you can live with the 1/64 oversize here.
Before you shorten the firebox lower edges, be happy about the attachment for the ashpan. These edges should be deep enough to comfortably put in a long pin to hold the sahpan in place.
The chimney base really does have to be properly aligned. More holes to be plugged and redrilled, and make sure the joint is airtight. And make sure the smokebox is properly square to the boiler in both planes.
The front axle journals with two flats? Familiar, mine are like that! But only a little, it doesn't show.
When you obtain the rear axle, give yourself a little extra length, to get all the clearances you will need so that the compensating gear doesn't foul the tender bolts.This will also allow the hornplates to be a bit further apart so you can fit shims, washers etc under the bolts. I cut mine too short and had the devil of a job getting everything in.
I have a whole list of other modifications to the Haining design which I can send you, if you decide you are going to move ahead with this engine. Good luck,
Paul Horth