I had exactly the same problem at the beginning of the year trying to get my swing arm bearings replaced. The bearings are totally seized on and I stripped the thread as a result of a little bit too much grunt.
Dilemma was solved by the formula: 2004 frame + ~20% cost of new frame = 2004 frame.
I bought a new 2009 frame. All the existing kit went straight back on the new frame. Very happy with the new geometry.
I might still get the old frame repaired at £50 but I think the real problem is getting the old bearing off.
Note to all 5 owners. Change your swing arm bearing every couple of years regardless.