Beautiful frame, criminal workmanship. A reminder why I don't take things to the LBS. They are on shop rate and Mgt will not allow them to take the time to nurse that seat post outta the frame. Drill it out? OMG what eegit had that idea? Now you got the devils choice: Replace the seat tube and ruin that original paint job. Braze fill the damage and ruin the paint job then take ages filing down the ID so a seat post fits again. Bondo the damage and touch up the paint but think about the criminal intent lurking down under you every time you ride.

A wacko would use a MTN bike seat post as suggested above and put a kids Disney band-aid over the damage. See who notices and make up a wild story about the wound and your heroic medical efforts. How about the time you broke up a big bank robbery but the bike was shot by AK47 fire and you and two fireman and a rich fashion model saved it using your belt for a tourniquet and a diaper for the bandage. Then you married the rich fashion model.