With that much wear I would be removing the housing & either replacing it or building it up and remachining it.
The bearing is obviously cactus & has been spinning in the housing for a long time.
Bearing are not bearings, they come in about 5 levels of fit to compensate for compressive loads when they are pressed into a housing or to allow a bit of extra running clearances.
The mower companies never list the class of bearing .
In your cae I would be considering fitting +1 ( slightly sloppier ) bearing