As it appears that the crack goes into the cylinder, I'd recommend that you find somebody who is an expert in using the Lock-N-Stitch or IronTite 'pinning/stitching' products and processes - and then sleeve the block. Most these guys have all sorts of funny air-drills, bits, etc - as tools of their trade. As you want to save the block, I wouldn't 'experiment' on it myself . . . just sayin!
Note: We had our Flathead Cadillac race block fixed by Lock-N-Stitch in Turlock, CA last year - they did one HELL of a job (I highly recommend you sending them your block for this type of repair process).
Cast Iron Welding: I've had multiple flathead blocks fixed/repaired by cast-iron welding . . . done by folks who tend to have decades of experience (grey hair), have the necessary furnaces, etc.. It is a tricky deal in that you really need to know how to correctly pre-heat, weld it when hot and look at the material, see what it is doing and weld accordingly (just like any other welding process). Also, you need to be prepared to re-machine all machined surfaces . . . as frequently things 'move' a bit in the process. I always assume that I'll be boring, decking, align-boring, new valve job, etc.. In the end, it can get expensive - especially if you were NOT planning on all those machine processes from the start.
I just picked up my original 32 block from Columbus Col-Weld . . . guy named Maynard Stump (77 years old) did the work. I broke a piece off the deck surface trying to get the old/rusted heads off of it. I was 'sick' that I'd potentially ruined an original 32 block with a STD bore. Maynard did an excellent welding repair . . . now I will start the rest of the machining process. I'll take a picture today and post it to this thread.
Take care,
Dale