Update: Took the rifle over to a friend who welds. No one in town micro welds or laser welds that I could find, and this option was basically free. He said it could be TIG welded but he would have to polish the bluing off around the crack. No big deal. If it is small enough I can touch it up with cold blue, and I'm thinking about rebluing the whole rifle anyway since I'm refinishing the stock. It was re-blued at some point in its life before and the second bluing job was with hot salts I believe. There are a few pieces that are a different color, presumably these parts were not included in the reblue and thus have the original rust blue which I like better anyway.
Anywhoo, we ran into problems TIG welding the piece--kept getting pin holes. It is definitely some type of steel but being 70+ years old and from Germany we cannot know the exact makeup of the metal. That's the only explanation I can think of. Maybe this friend is just a ****ty welder but I don't think that's the case.
So, option 2. Took the rifle to the best gunsmith/machine shop in town and asked the expert. His recommendation was to mill off the entire dovetail slot and cut a new slot. It'll probably end up costing me $60-70 or more but oh well, I want to do this right. The machinist here doesn't have a dovetail cutter small enough (it's a tiny, odd size) so what we're probably gonna do is cut the new slot square, drill and tap a hole through the sight insert and into the ramp, and attach the sight insert via a set screw. There's enough metal on the ramp for the hole to be pretty deep so it should be a solid enough attachment.
So, moral of the story, don't waste time trying to save money. I seem to keep learning this lesson repeatedly.