I wouldn't be too worried about the hole. I have owned a few banjos that had the hole drilled that close to the edge. As long as the rim rods aren't tightened past neutral, it shouldn't give you any trouble.
That gap between the rim and the tone ring is another matter. With a rim for a one-piece flange, you could probably have the rim turned so the ring would fit flat on the top; This banjo appears to have a tube and plate flange. I don't know if you could get by with having that one turned. It might damage the supporting bead, and the ring would have to have a notch milled so the lag bolt would still work. You might have to decide if the banjo is worth the cost of having a new rim turned.

I would consider plugging all the holes and drilling out a new set holes a little further around the rim in a place where the plugged holes are covered.

I guess my other thought would be to just keep an eye out or put a want to buy ad for a 11 inch two-piece flange rim.

I'm a little bit aware of different types of geometry, as far as one piece flange versus two piece flange… but certainly not an expert in banjo geometry... How do I determine what type of rim I would need to get that would still fit my hardware

I think I'm starting to get a picture of what's going on. This tone ring might not be original to this banjo, and so the holes were expanded vertically to compensate for the raised height from that tone ring that doesn't fit… if that’s not the case and this is how it came from factory. I don’t recommend Morgan Monroe banjos.



Here’s another thought I had…Would it be bad to modify the tone ring?

I have a machinist at work that would only charge me a Wendy's biggie bag… Then I suppose I could maybe plug the hole a little bit up top with like a half dowel just for getting back some of the structural support.

And if I'm correct, I could then use the original height of the coordinator holes to compensate for the height change. But then that probably means that this rim and tone ring would be married to each other

Put a magnet on the tone ring and see if it sticks. Likely it’s stock (steel) tone ring. Theyre really not worth much on their own. So, you really wouldn’t hurt value much having outer skirt milled shorter to enable your inner skirt to bear on rim inner top edge, like it should. The outer skirt not really touching the wooden ledge isn’t critical. The inner skirt of tone ring touching inner ledge is important for tone, but youre only going to get so much tone from an import steel ring. You can make them louder with good fitting.
Fitting a flathead tone ring: place dollar bill top of rim, set ring down on it and hold with one hand ring and rim combo and try to pull dollar bill out. If you can, it’s not seated well enough. If you can’t pull dollar bill out all the way around, you’ve done about the best you can do. Even if ring outer skirt shows slight gap with rim, that’s ok, more cosmetic than anything.
If the elongated hole bothers you, dowel entire thing then redrill correctly.

"Would it be worth . . . "

Looking at all the recommendations for various fixes -- new rim, plugging, drilling, milling, buying parts -- if fixing this banjo is is an enoyable hobby or project, where the process is enjoyable, not the outcome, go for it.

If fixing this banjo is a chore that has to be done to flip the darn thing, then no, it is not worth it.  Just chalk it up to one of the possible outcomes of buying something at an estate sale.  Sell it cheap or part it out -- neck might be worth something -- or give it away.  And go on to your next project.

I’ll do a magnet check when I get the chance. It seemed to have good mass to it. The whole banjo was just shy of 11 lbs when I weighed it.

Right now my thoughts will be to measure the tone ring and compare its dimensions to make sure it is a standard geometry. If so, my inclination even if its cheap material is to buy a rim blank and make a new rim.

For me, it is worth it for the educational aspect even if its not necessarily “worth it” to upgrade this banjo. If it’s standard geometry and I do a good job, I can keep swapping parts until nothing of the original remains.

I did get this banjo pretty cheap for $200. So what’s another couple hundred to make it nice?

Yep.  Good experiment and do-it-yourself learning process for $200 !

I was able to do a magnet check today and I think the tone ring is actually brass. The magnet did not stick. So there is some good news.

I was able to take measurements of my rim and tone ring and make 3D CAD models.

I’ll post the drawings of my current rim and ring tomorrow so I can compare to a standard geometry Gibson two-piece flange rim.

I made a new topic for the rim build.

banjohangout.org/topic/410355