Well after over a week and about 200 miles of driving my ML with the repaired TQ drain plug hole, I think I can put this to bed.

What worked is the Time-Sert kit of tools. This consists of a drill, counterbore, tap, insertion tool and inserts of various sizes. I went with a 6.2mm depth and it seems to have worked fine.

The hardest part of this job was keeping shavings out of the whole thing. I used grease to capture them, turned the tools by hand, withdrawing and cleaning/regreasing them every half turn, repeating. I also used a small rare earth magnet at the end and captured a couple of very small shavings. I also squirted trans fluid into the TQ using an enema bottle (!) and let it drain out quickly, presumably draining small debris with it.

My thanks to those on this thread and in PMs who helped out with advice.