We did this repair a few years ago. The old zerk was a lump of rust. We had the rudder out of the boat for other work, took the opportunity to drill a new hole through the wall of the rudder tube, tap and install a new zerk. I think the new fitting is stainless. I'm careful to keep it greased so that I don't need to find out.
If memory serves, the zerk was threaded into the side of the fiberglass tube half way between a bronze bushing which was glassed into the top and a second one at the bottom of the tube. The bushings provide the actual bearing surfaces for the rudder-stock.
We had the yard grind down and glass over the old zerk.
Don't be mislead by the location of the zerk above standing waterline when you are at the dock. With the boat in motion, the quarter-wave sucks water clear to the top of the tube. Our boat has a packing gland at the top, which has never been serviced and which leaks. If I find too much seawater spilling over the top of the tube, I know it is time to pump more grease into the zerk. I don't overdo the grease, I've never found any outside the boat, but it always squirts messily out the top, through the crappy old packing gland. Then I know to stop pumping.