I did hear back from the builder about the fabrication steps. Apparently the relief slot through the insert is not cut until insert is reamed to the correct dimension. The reamer apparently can't ream through a discontinuity (cut) in the sleeve. So the insert is reamed to size and then the slot is cut. According to the builder when the slot is cut in the sleeve it can cause the seat tube to expand. However take a look in the photos at how much the slot closes up when the clamp is tightened. Too bad I don't have a cylinder bore gauge to check the depth of the bore further down the seat tube.
The builder claims... "The additional .020” of tolerance is within the acceptable margin that is pretty common with hand reaming metal bikes from what I have experienced from fabricating bikes...". He did mention that the seat clamp is "less than optimum" and will be sending a different replacement.