Alan,
Hard to say what the "mid section" problem was without a 17 cal bore light, good eyes that know what to look for and some close inspection. But it could have been something really minor to fix, or might have fixed itself with shooting. All new barrels shoot-in to some extent, and since TC's are not lapped that holds especially true with them. Doesn't take much to interfere with a little 17 pill at relatively low velocities, so it might also have been unfixable full length or even recrowned. While TC's QC has been about as good as it gets over the almost 44 years, they did have products that squeaked through with problems now and then. Not just barrels, but also frames for both the Contenders and Encores. Material quality not up to specs, design glitches, dull tools, or machinists who had a hard night beforehand might have been the cause of some of them, and QC let them slip through to customers. I do know that QC was a constant pet peeve of Tim's to prevent it happening, but it still did.
Sending it back to TC "as is" was the right choice. Not because of the crown as I know your abilities on a lathe, but due to the mid section. It would have voided any replacement from them if you had tinkered with it or lapped it.
The 17HM2 is a very good "turn key" niche not easily filled by something else, at least not for the all the types of shooting and hunting I did with them, so I just can't understand the manufacturers backing away from it. If push comes to shove I can help you out (I'll send you a PM).
L.