Have the ****** in neutral when you check any brake drag on the rear wheels.
I would unhook the left parking brake rod, loosen the lock nut, pull the parking brake lever forward to lock the wheel, then screw the end of the rod until the parking brake pin just drops through the hole. Now, don't install the pin, but unscrew the end a turn and insert the pin, then check the wheel for drag. You want the drag to just barely be gone when you insert the pin. Repeat this same operation for the right side.
After doing both side, see if the rear wheels lock on the second or third click.
If you drill and insert a bushing in the handle, it will have the hole in the wrong position, since the hole is now a slot. Either weld it shut then drill the hole where it should be, or use a mill to make the hole for the bushing. The forward end of the slot shouldn't have any wear, so let that be the guide for the correct hole location.