I have actually encountered this a number of times, most recently on a 90's mountain bike but also on a couple of 70's roadies and a few others. It has nothing to do with miles or age or rider weight or trail use; in all cases I've seen the bulge was caused by people over-tightening the stem to the point that the steerer starts to bend outwards: If rider weight or rough terrain / hard impacts were to blame the steerer would be bent rather than bulged around the quill wedge.

On topic, I would recommend staying away from the threaded-threadless adapters for all the above mentioned stylistic reasons and that they actually make the bike a little less safe; running an adapter means you have two friction joints holding the bar to the fork rather than just one with a quill, increasing the potential for slippage. Also consider that when you add up the cost of spacers, the adapter, and the new bar you will be paying more than the cost of a high quality bar that fits the original stem and has none of the drawbacks.

That said, I do think a threadless stem can look as nice as a quill on a traditional frame, but getting it right is not an easy or cheap trick. The best examples I've seen are from people running a modern fork on a classic frame.




In short, threadless stems are for threadless forks; either go all the way with your upgrade or don't, half measures have a way of nipping you in the ass.