It does look to me like he ground it off to the point that nothing except probably a piece of weld like tin foil was holding that part from coming out with all the centrifical force applied to it. Like I said the engine builder has an ego bigger than the moon so he will never admit he messed up but it is obvious he did. I have seen cranks balanced the way he did it but installed and welded properly as you said, he made a mistake but will not admit it. I made a mistake by taking it to him and should have gone out of town for sure. He was a friend but no more, money paid can be recovered but time + lost and track/race time lost can never be replaced.
Rick