Don't cut off any from the spindle. That "last quarter inch" is a lot more important that you may realize. Without it, no stock collet assembly will fit. Also, you may need to mount a drawbar there for milling cutters. Without the extra 1/4", chips may not fall clear of the gear cover, but will instead fall INTO the gears. My feeling is that you will be able to salvage the spindle. Take it to a machine shop and have them cut the welds off, then grind the remaining welds flush to the rest of the spindle (you'll need a lathe with a large bore to do this).