That wasn't drilled. My muffler developed a hole one day in that same spot. I think it's a rusted out spot weld from when the muffler was manufactured.

I don't have a welder now that I'm retired, and the hole in my muffler was about the right size for a 1/2" fine thread tap. There's a lot of metal there so I ran a tap into the hole, cut a bolt so it had about a half inch of threads on it, put red loctite on the threads and screwed it in the hole. It'e been in there for three or four years now.

My muffler does have a couple of extra holes drilled in it, but they are in the end on either side of the actual outlet. Provided by one of my bike's previous owners . My bike has the stock jetting and it runs fine despite the holes. I don't know how much louder than stock it is with the extra holes, but it's still pretty quiet. The mechanical noise from the engine is at least as loud as the exhaust.

Thanks guys.  I do believe you are right, oldNslow.  As I look at it more, it appears it’s been gunshot from the inside.  The metal appears blown out and not drilled clean from the outside.  Eyeballing it, it looks like it’s within 10” of where the muffler actually begins (excluding the clamping area).

There seems to be another hole forming in about the same area where the muffler faces the wheel/tire.

It does seem to be running hot (the pretty rainbow).  Maybe I have my jetting too lean.  Time to move the e-clip back down a groove on the needle.  I feel like a drunker sailor dialing in the PWK38.

And maybe it’s time to install the dyna I have stashed on a shelf.  Then plug the stock muffler with a cork.