I have one inclination to keep using the screw that came with it. By chucking on the threads one could turn down the head so it fits in the pocket. It would look reasonably correct.
My reservation here is the OD portion of that screw shows wear.  If it is just catching by the points of the thread it may strip if too much pressure is applied.

Redrilling a new set of holes just forward or behind the originals could be a solution if yours was not so potentially collectable. The hand guard would not fit the sight if this is done.

Building a forming screw/tap to displace the metal to something resembling the original threads is the other option I see. Working with this barrel, it could go wrong as mentioned in my first reply.

Whether the CMP could re-barrel it to carbine specs and not lose collectors value I will let others weigh in on this option.

On that first solution I could do it in 5 minutes with the screw and sight in hand. Others have reduced head size by chucking on the shank with a hand drill and filing. I would not recommend this as the chuck jaws may damage the outside of the threads and cause a marginal fit to strip. If you have a local machine shop that has the right size collet it would take them no longer that it would take me to do it.