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@benbrangwyn
If you ream it, that's going to mean some part of the headtube where the races fit will be thinner than they're designed to be. That'll be a weak point.
Given that it's a steel frame, perhaps setting it back to circular (or a lot nearer) using a vice might do the trick. A friend has a newish Specialized and was running very loose headset for ages (I moaned at him continually), but when I replaced his headset, there was no ovaling at all, even though he pounded the bike. So I'm guessing that perhaps it's a softer metal than other headsets and therefore might bend back more willingly and with less structural impact. Kinda dodgy on such a critical part of the bike, but I'd prefer that to reaming.
Good lesson for the rest of us re headsets.