Well, you could if you can get it clean enough but you might be able to remove the plug and either seal it up or replace it with a new one..probably both. It's just a plug to close up the factory cross drilling operation that provide the oil supply to the front cam bearing. You'll see one at the center block web and at the rear, too. There is no pressure at that point (or any point beyond the pump in a splasher)as it is gravity fed. It won't do any harm unless it falls out completely, which is unlikely. It does make a mess of an otherwise exceptionally clean looking engine.
I have a bare block here so I'll have a look and see if it seats in a counterbore or is just driven flush. I'll bet on the latter.
Have you solved the generator issue yet?
Frank

I was looking over some build pictures and came to the same conclusion, that the hole is for the oil bore in block. I will clean it up and apply some JB weld to seal it up. That should do it.
On the generator, I went up under the dash this morning and figured out what the problem was, I had installed the dash lights when the unit was on the table and flipped the lights to the wrong holes, when I changed them back to the proper position, the gen light went out when running and the oil light as well. So it was just a matter of putting them in the wrong holes!
Thanks!!