Hi,
Yes, the holes are worn. The upper hole is really worn, it is originally round, the size of the upper side of the hole. It looks worn in the picture, sometimes a picture looks different than the things actually are.
The lower hole is worn too, but not as much as the upper hole. The lower hole is originally round.
You will need to replace at least the upper part, the throttle arm on the governor housing, for it to work right.
There are 2 different lengths of arms used, the upper part of the arms are different lengths.
The 1st picture below is the long arm, the 2nd picture is the short arm. Try to buy one like the Cub has. The 1st picture is from TM Tractor Parts.
J P Tractor Salvage might have a good used arm. They are near the bottom of the Forums page on here.
Be sure to oil the arm and shaft it goes on, they commonly get tight there from no oil.
