I suspect the OP's frame has the same problem of a frame with a built in unrelieved stress. I have seen a posting of a couple bianchis with the same problem. The OP's bike has the extra problem of the pointed lug which provided a stress riser. Not a problem normally, but with unrelieved stresses, that would be a failure point.

I'm conflicted about repairing it. Seems to me that as long as used ones are out there cheaply available, buying another is a better idea. If the price of steel frames holds up, a repair will become economic. A head tube is a relatively easy repair in comparison to the top tube or some other tubes that would be hard to match. But with the price of the repair, plus the price of a relatively inexpensive paint job, the op would be over $400 in a heartbeat.