Might be easiest to make a temporary go/no-go gauge?
You know the maximum and minimum bore sizes (the 1" shaft plus 12 tenths and plus 7 tenths), so turn and polish a piece of scrapbinium to 1.0012" at one end, 1.0007" at the other, use to check the bore as you go along - if the 1.0007" end goes in but the other doesn't, you're where you want to be! This has the advantage that you don't need to measure the inner of the bushing to tenths, with a 0-1" tenths external mic' you'll probably be able to measure to a few thou" over, and you'll be able to verify the shaft diameter really *is* 1.0000"
To be more cautious, you can turn a few smaller (by a couple or three thou" a time up to 0.997", then a thou" to 1.000") steps on the 1.0007 end, to give an idea how close you are on the bore, and *be sure to break the sharp edges* (however smooth it feels after turning) with a very smooth file, fine abrasive paper or a stone so you don't raise burrs on the edge of the bushing.
Just my ha'pennorth,
Dave H.
EDIT: I meant smaller, so the measurements should have been smaller!