UPDATE:
My son and I had some time in the shop together today so we decided to come up with a fix for the shaft wobble in our 1970 HS40. What we came up with is relatively easy and the parts are readily available. After disassembly, we saw that our shaft hole was significantly worn in an oblong shape with much more wear up and down than side to side, very similar to the photo Marcus posted.
We went to our local Orchard Supply Hardware and purchased a section of aluminum tubing ("K & S Precision Metals # 8104 Round Aluminum Tube") that we used as a bushing. The size on the package stated 3/16" X .014". (The latter number is the wall thickness). You need a length cut to a hair less than 5/8". Don't try to use a tubing cutter to cut it to length, as you will crush the ends (we tried!). We used a small metal cut off wheel in a Dremel. Using a good precision caliper we measured the tube ID at 0.154" and the OD at 0.187". Make sure and clean up any burrs on the ID or OD of the tubing.
You will need a good-quality & SHARP 3/16" twist drill to drill out the worn shaft hole in your block for the new bushing, however, I would recommend working up to that size with a couple of smaller drills first. We used a hand-held cordless drill on high speed holding it steady, square and level to the engine block. The 3/16" drill bit we used measured exactly 0.187" (Hint: We noticed that different drill brands measured larger than others by up to .006" even though they are all sold as 3/16"- we selected the largest one we could find (.0187") which was a "Dewalt Industrial Cobalt # DWA1212").
The new bushing was a nice snug fit in the newly bored governor shaft hole, just pressing it in with our fingers. After lubing and reinserting the governor shaft it was a HUGE improvement over the previous slop of the shaft. Also, after running the engine I have no more oil leak there like I had before.
Michael