John,
all the 920 conversions I've seen on the stock iron cylinders cut into the oil return hole, but it doesn't seem to cause a problem, at least not on the ones I've used.
The problem I encountered when first doing 920 conversions, using the normal boring and honing techniques, was that the engine seemed to run reasonably well, with lots of mid-range improvement, but no real increase in top end power. It also had significantly more blow-by and oil use. When I looked at the bores, I saw dark areas at the top of the bore at the locations of the counterbores for the socket headed through bolts. There is no suppport there for the sleeves, since you have to bore all the way into the counterbores to make room for the sleeve. It was very clear that the bore was distorting in those locations, and the ring was not sealing the top of the stroke. That's when I made the torque plates and started using them. That solved the problem. When I disassembled the engines built this way, the bore wear pattern was uniform, with no difference around the area of the counterbores, and the excessive blow-by problem disappeared. I've been sold on the torque plates for big bores ever since.
I haven't done a new 920 with iron cylinders for many years, but I've thought about doing one with a different technique. I've got some cast iron bar that I would use to turn plugs to fill the counterbore holes in the cylinders, with center holes to clear the 3/8" through bolts, but not the bolt heads. I could either bond them in with loctite, braze them in, or silver solder them. I'd then bore the cylinders and sleeve them, which would give solid suppport to the sleeves at the top end. I would use longer socket head through bolts, leaving the head of the bolt on top of the cylinder. I'd then drill holes in the head to clear the bolt heads, and make matching holes in the copper head gasket. I got the idea from Steve Maney, who has supplied his cylinders without the counterbores on request. That's the technique I'm using on the Maney 1007 engines I'm building, and I think it would also work well for the 920.
So many project ideas, so little time.
Ken