Several of mine were off by 1/4 inch or so. I taped off the seat where it mates with support and taped around the support itself. Mixed enough thickened epoxy to fill the gap and slathered on support then put the seat in place. Carefully cleaned squeezeout from the places it shouldn't be. Pulled the seat and did a littl cleanup after cure. Worked fine and no one will ever be able to tell unless they remove the seat. Which seems unlikely.  

When building my Eastport pram, I didn't realize my center thwart hadn't seated itself properly into the peanut butter, so it cured just a little out whack.  I had considered buying one of those oscillating multi tools to slice the offending parts apart.  In the end I realized only I would notice it so left it alone.  I don't know how flush those guys cut, but it might be an option.

   Thanks for the ideas but mine dropped an inch, so it's to far off to fix with thickened epoxy.  Has anyone tried heating cured epoxy or is that just wishful thinking?

Heating will soften the epoxy BUT also the surrounding epoxt / cloth etc.My suggestion is a multitool to remove and reposition the peg. If I understand your situation any cosmetic issue should be covered by the seat / floatation when the seat is in place. Good luck  SEEYA Jack   

Perhaps a spacer block of the same material, shaped to fit the space with gaps filled with thickened epoxy would do the trick. This is more of a work boat, vs. museum piece fix though. It's sure what I would do given the hidden location and given the difficulty of making a smooth removal effort of the miscreant spacer.

Then I'd mock the folks who turned up their noses ;-)