I had forgotten about the split
bushing, which I would still consider reaming on a lathe with a collet chuck. No setup, just a tool change.
One of the best tool for my 9x20 lathe modified lathe kit
from the land of almost right, was my ER32 collets and chuck, opened up the lathe possibilities, rechucking etc. With accuracy to 0.0004 (four ten thousandths), hold fragile tubing tightly with out crushing, no slippage. So good, I got a chuck for the mill, use the same collets. ER32, collets are cut with 16 contraction slots giving each collet a range of about 1/16" hence Extreme Range. 12 collet set will reach down below 1/8 up to 13/16. Brilla Precision Tools, BPT. But they are not cheap.
I still wonder about the squareness of the setup on the mill. You must have set the main cap in the vise with parallels. I guess you can run the tip of the indicator down the inside of the bush housing to check square. Also, deflection from the over hang, but it might not be significant with such a light cut.http://www.birlaprecision.in/standard_products.html