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I fixed a friend's SLX Merckx that had a similar issue with a 1 1/8 quill stem. The frame had fallen directly onto the binder bolt from a rafter when he was moving so it squished the binder lug inward and down. Using a 1 1/8 quill, we inserted it and tightened it to press the squished portion outward, in turn straightening out the tube. We kept the wedge on the crimped portion.
It is now able to run the 27.2 post it was designed for. Maybe a simlar method will work for you?
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