Help me decide if this steering stem is too worn to use!

I bought a used KLX 110 2007 and I have been going through everything and came to the steering stem. It only had a dozen bearings in the top and bottom together. Most had fallen out or perished. I have to replace all of those, I thought I would just order an All Ballz kit. But the stem is chewed up a bit I just don't know if where the chewed up spot will matter with the new kit. Here are some pics. The damage is below the threads and grooved not sticking out. The new Stem is about $150.00. I would sure like to save that $ but if I have to I have to.

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Any help would be great!

The new bearings will be regular bearings like on any other motorcycle, not the bicycle type, so you will need to get that race off there. I would probably use it.

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