I would not make a thin walled extended nut, that nut would not be as strong as it can be as the internal threads makes a crack instigation especially at the dimensional changes on the outside.

If not changing the full stem, I would replace the top end of the stem with a reinforcement tube-in-tube in the center, then bore out the handlebar casting as little as possible, with a shallow recessed ledge to stop the insert from sinking further. Then turn a exact fitting steel insert with a rim, that is lightly pressed in. A couple of spot welds would prevent the insert halves from ever turn in the handlebar. Then cut the split slit. A standard stem nut would top that off.

Please be aware that the handlebar casting is an important part of the fork stability. When mounting the handlebar on the fork, the casting must fit snug on the both fork legs but there must be an ample gap between the hole in the handlebar casting and head stem in order for the headlight stem nuts be able to firmly clamp the fork legs solid!

In the pictures can be seen an example where the headlight stem nuts was not tightened hard enough or tightened in the wrong sequence, the fork legs was moving and a sure sign of that is the red contact rust that developed in the gaps!

Modern bikes has the upper triple tree, as it is called, made as a separate part but on the Indian the handlebar casting is that part. The headlight stem nuts clamping force that tie the fork legs (those that stick up on each side of the head stem) are most important, as that is the factor that stabilise the fork legs from moving about.

Correct procedure and first important moment to firmly tighten the headlight stem nuts in order to clamp the legs solid without interference from the top nut, then the fork bearing is adjusted and after that the top nut is torqued.

The fork bearings should be tightened down so there is no play and just, but no more than it is felt a slight smooth resistance to turn the handlebars from side to side. Modern bikes with tapered fork bearings are tightened down much harder and sometimes there is a set value of the resistance the handlebar should have to turn. Not so on the Indian with somewhat delicate ball bearings and races.

The top nut is to tie the head stem and fork legs together and secure the top bearing from turning and upset the fork bearing adjustment.