Sounds like you're good to go without the radical surgery. That's great. A key point is that the rack bolts are loaded in shear and not tensile, so the threads don't have a lot of force on them. Keeping vigilant is a good idea.
Yup, you nailed it: Heli-coil is one brand name, and probably the most popular. And there's slightly different versions available from different companies (Keensert and others). If you've done this you know that it requires a good drllled hole (preferably on a drill press, with your bike held down with a proper fixture or ad hoc work-holding tools), a good tap (again, you have to be sure that the tap is aligned with the hole), all with proper lubrication. So its good you don't have to do this!
Enjoy the riding with your munchkin.