Originally Posted by JohnDThompson

Without intact threads, there's nothing to hold the cup in a stable position. If you adjust it so the bearings rotate smoothly, the cup will wobble on the steer tube (try it if you don't believe me -- it may work for a short while in the work stand, but not on the road in the long term). If you adjust it so the cup doesn't wobble, the the bearing will not turn smoothly.

You really do need to either fix the threads or replace the fork.