Is there a bushing that I need to buy for the bottom of the knuckle?
If I just ream it then there will be and hour glassed shape in the knuckle, Because it will be tapered on the top and bottom, right?
You shouldn't need a "bushing", just a grade 8 washer for the threaded side. Have you used a taper ream before? If not, use lots of cutting fluid and use a grinder to knock off the surface hardening in the hole.