<VV> Spark plug thread repair - ??

[Doug Mackintosh]

I've never seen anything like this before. Can anyone tell me what I'm looking at, and any ideas how to fix it?
 
This is on the mongrel Corvair I am working on. The engine is (mostly) 1965 110 HP. The # 6 spark plug hole has this protrusion, which I assume is part of some attempt at thread repair. As you can see, it protrudes (approx 1/8 inch) from the head. The surface the plug gasket would seat on is a narrow edge (not a nice wide gasket seat as would normally be in the head). The threads go partway down the hole. Where the threads/insert end, the hole in the head is larger diameter. The threads also stop short of the top - there is a small (1/32" ?) counterbore in the top before the threads start. Here is a link to a photo:

http://www.flickr.com/photos/30499360@N07/2858425990/
 
Does this look familiar to anyone? Does anyone know what to do about it? I hesitate to do anything since at this point,  I don't understand how it was installed.
 
Thanks

-- Doug Mackintosh
Corsa member since 1996
Corsa/NC member since 1996, Virtual Vairs member
Corvair owner 1969-1971 and 1996-on