Hi Robert,
If you wanted to be purist, you would make the steam ports square, as per original / plans... However I'm not that convinced that performance would be compromised in any noticeable way by leaving these ports circular, instead of square ended (unless you significantly reduced the area of the ports) - certainly no one else is ever going to know, as this is a rather hidden detail!
Why not just mill the slots as per your suggestion, then open up the ends of the ports by using a small file?
RB.