A sleeve would do it - but probably impossible too.
A sleeve that goes all the way through both holes is out - the trackbar has to go between the holes.
A sleeve on the rear hole - it's near impossible to see the nut on the backside as it is - can't get a welder in there to attach the sleeve.
Putting a short sleeve on the front hole would be good, but it would have to be really short to clear the drag link - or is it the tie rod?
Welding in that short a sleeve would probably distort the sleeve's hole too much, you'd have to drill it open again, then you are back to an egg shaped hole big enough to get the bolt in.
Hardened sleeve? Not after you welded it in - the heat would anneal the sleeve making it soft and easily wear, defeating the purpose.
And then you'd still have a re-inforced hole in that thin bracket - I think it's 1/8" there.
That bracket really needs to be thicker anyway. Adding the 1/4" plate makes it stronger - combined 1/4 + 1/8 = 3/8".
After you drill the hole in the new 1/4" plate, but before you weld it on - heat the new hole in the plate and the area around it red hot. Then douse it with cold water till it stops bubbling.
That will harden the steel around the hole somewhat to help prevent further wear. Then use a hardened metric bolt and nut.
Tip - when fighting putting the nut back on - use a new hardened nut. Remember the original had a little piece of bent sheet metal on it so you could poke it up into place. You can get it up there on the end of your finger, but it's near impossible to get a wrench on it to tighten it.
Simply weld, or JB Weld a similar "handle" on the nut - a strip of sheet metal, even a piece of coat hanger tacked on the nut helps you feed it up there. If it's strong enough, you won't need to get a wrench on the nut when torquing it down. It'll jam against the bracket and hold while you tighten.
As far as "How loose is loose? Good question. Probably the best answer is "How much DW is acceptable?"
I had one that moved only enough to feel with my fingers when I put them on the bracket and the trackbar at the same time, you couldn't even see it move while wiggling the steering wheel, but I could feel it. The DW wasn't real bad, but doing the procedure really made a difference.
It may not be the answer all the time - look for other reasons first. I usually get those kinds of things (problem childs) after everyone else has had a shot at it and given up.