Getting to the Core of the matter
http://www.westsystem.com/ss/installing-deck-hardware-sail-epoxy-basics-5/
There is a primer on this in this video series.
Another way to remove an oversize 'core' is to drill up from the bottom with a small hole saw and NOT drill all the way thru the top frp layer. You want to remove *only* coring and the bottom layer. I have four new cleats waiting to install and my strategy is to use a 3/4" hole saw with a small ss clamp tightened around it to provide a stop (!) when it has removed the coring and not gone into the top frp deck layer of cloth.
These projects aways seem to require laying on one's back, in some near inaccessible part of the bow or stern, reaching up at full extension of arm, and holding a drill steady. Easy. Right. Yeah sure.:0
A few years ago I put in a bow anchor roller with G10 seated in epoxy mush inside, as far as my long arms could reach up inside the pointy end.
(It was sort of like the legend of the young knight being instructed to hold a small rock straight outward at arm's length as a test. It turns out that I was not "knight material" ...)
My point, and I do have one, is that when you re-drill the hole there is no longer *any* compressible coring around that bolt for an eighth or more. If any water ever leaks past it, it is prevented from saturating the balsa coring.
As for sealant, I agree with the guy in the video; pick one and go with it. I have used clear LifeSeal for all our deck hardware for many years, and nowadays am using some of the gray non-hardening caulk I bought from MaineSail.
BTW, if you follow the advice from the MS site, you should be just fine, also.
http://www.pbase.com/mainecruising/rebedding_hardware
"MS" does not mention the "overdrill, epoxy fill, and redrill" technique in this particular article but the best shipwright I know does this on EVERY single fastening hole thru a deck.
Regards,
Loren