Originally Posted by
sweeks
Devil's Advocate position here: Ride it.
The fracture is completely circumferential around the seat tube. If there is no evidence of the fracture propagating off in another direction along the tube or into the seat stays, there is no down-side to riding the bike except 1) the saddle is somewhat rotationally unstable (though not completely, because of the rough interfaces between the two parts) and 2) you can't lift the bike by the saddle without the seatpost coming out.
The one comment is that there may be a benefit of filing down the damaged part of the frame so it is smooth. That will help prevent a place for cracks to nucleate.
The OP still has an issue with the steatpost being unstable in the hole which should be addressed. Undersized seatpost? Find a larger seatpost?