While it's not a recommended repair for that trunnion, the way it's squeezed together (by removing the long outside portion) actually takes the slop out of the control and would improve operation--until it broke completely, that is.
I can certainly see your situation, the more you dig into things, the more you discover is needed. I'd remove the hydro, open it, remove the trunnion arm, weld on a new square (from xtrememotorworks.com) and put it back together. You could just cut off the old one and weld a new square on without pulling the hydro, just be sure to keep the trunnion arm cool with wet rags to avoid damaging the shaft seal.
Will definitely follow your progress!
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