Quoted: ...Should I round the flat spots with a grinder ...
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No! Put the grinder down!!
Are you sure this is where it is rubbing? Is it shiny?
First, I’d try this. Get yourself some cold blue (Birchwood Casey is fine) and blue all the shiny areas on the crane where it might be rubbing. Then assemble everything without any oil and cycle it a number of times to create a new shiny area where things are rubbing.
When you positively identify the binding area, very lightly cut it down, preferably with a fine stone. Barring that, I’d wrap some 400 grit wet and dry paper around a flat piece of metal (a small file would work) and use it.
If you need to go inside the hole in the crane, to my mind a snug fitting drill hand-turned would be the best way to go. A round Swiss file very, very carefully used would also work. Wet or dry paper wrapped around a dowel rod would work, but wouldn’t be my first choice. Thing of it is, you definitely don’t want to enlarge the hole
at all, just knock down any high areas.
Then reblue the area you worked on and try it again. Go slow and try to only remove the absolute minimum amount of metal.
Based on what you’ve said, I’d think this would be a fairly easy fix as long as you go slow.
Incidentally, among other problems, fitting a new crane means you’d probably want to refinish the revolver (note how the front of the crane and the front of the frame were obviously polished together).