jgh, sorry to hear about your problems so far. And yeah, I don't know where these stories come from but if the modern reproductions are faithful copies then there's just no way that any sort of coin of the right diameter is going to fit.
The steel for the new sight doesn't need to be anything fancy. I used some ground flat stock O-1 annealed tool steel simply because it was handy. But some 1/8x1/2 cold or hot rolled whatever you can buy from the metal stock rack at most hardware stores is equaly fine. You'll likely want to get some 1/4x3/4 at the same time to make up that funky looking clamping jig I show in the pictures.
The hot rolled steel from Home Depot is actually a little thicker than nominal so you can file down the thickness then rub it on a sharpening stone to dress the final thickness down to where it is about .0005 to .001 wider than the slot in the barrel. That'll give you a nice snug "tap in" fit.
From there use the home made clamping jig to hold the blade's base while you taper file the upper blade.
And if you're not much of a metal worker keep in mind that a file can work like a poor piece of sandpaper or a precision cutting tool depending on how it is used. A file only cuts in one direction and it should be lifted off the work or at least the pressure reduced to minimal on the return stroke. And if held well using two hands it can be used to cut pretty darn flat faces. To do this obviously the pressure has to shift from the front to back hand as the stroke of the file move ahead. It DOES take some practice and a bit of feel.
The good news is that if you bought the typical 3 foot length from HD you've got LOTS of material to practice on....
Stick with it buddy. I just shot the two Colt repros shown in this thread at a big weekend shoot. The sights served me well enough to aid in some small way towards my first place plaque.