No you can't line bore this application, NOR would line boring them achieve what you're trying to do. Nor can you machine them with the caps on the case...... Way wrong.

To the OP: I'm working with an 8-3/4", not a Dana, But my factory caps were as I believe you are describing. The mating surfaces, and the threads fit and aligned, but the edges of the caps hung over the edge of the case mating surface and were nowhere near looking like a matched set. The MW steel cap I installed on mine actually fit the case much better, but still not perfect.

Is this what you're describing? If so, I think its inconsequential. What's important is the that the bore is correct, and that the threads align when the cap is centered on the bolt/hardware. I'd say move along, you're fine.