Someone who does real frame repair and/or framebuilding should have a few options. I could see removing the headset and cups and try to determine the cause. It looks like poor installation and/or improper fitting cups (too large). If the bottom (where the lower cup is ) is fine and usable as is, I could see drilling a hole at the root of the crack (for stress relief, and to terminate the crack and keep it from propagating). Hopefully upon headset removal, the crack will spring closed. For this reason, I'd drill the hole first, because it will be easier to located the end of the crack (root). If it does not spring closed, I'd try to bend it back a little. The inside and outside of the crack is ground a little with a die grinder (think dremel tool) to vee it out for braze repair. The crack is then brazed up, with care taken not to soften the other braze joints. The inside and outside of the repair will then need cleaning and re-shaping, with filing and some work with the die grinder. Then a proper headset installation, first with reaming to get it back to size after the repair, facing for alignment, and then headset installation, making sure to use the correct size. I would think that a properly done braze repair to the crack would be of adequate strength. Alternatively, all the above applied, except for a skilled TIG welder could fix the crack with welding instead of brazing. Tig welding can localize the heat to a high degree. One could also TIG braze.
The other option would be for a framebuilder to replace the head lug. I don't know how often this is done, but it is doable.
Either repair, paint will needed afterwards. I think the former method would require the least amount of intrusion, but I think it is a more unorthodox repair for bicycles. Rather common in other applications. The former method could be done by someone skilled in that type of repair (crack repair), unrelated to bicycles (a welding shop or a machine shop that does job or repair work). I would not expect the latter type of shop to ream and face the head tube after the repair, but leave that to a well equipped bike shop.
I'm assuming you have steel lugs, either investment cast or pressed steel.
Cost to repair? I have no idea. I think the crack repair could be brazed or welded within 2 hours, prep to finish (not reamed or faced).
Last edited by krome; 04-21-11 at 10:35 AM.