Granite 1324 fix spindle bearings, remove mill head, upgrade bearings, etc.

Hey guys, so I'm working on a smithy granite that has a few things to sort out, the most pressing is the spindle bearings. I can put a dial indicator on the cross slide and press against the chuck and see a large enough change in the reading. Also according to the smithy check procedure found here it will easily rotate more than 2x when it is spun. They say to loosen something and smack it with a hammer and a block of wood. Seems real precise to me. When they refer to the parts diagram for the screws to loosen the parts diagram can be seen on page 11 here.

Has anyone done this?

Also:
I am talking my friend into getting a real good mill and just using this as a lathe as the lathe seems ok but the mill is more trouble than it's worth to remove the whole lathe setup, and them remount it again.

If we remove the whole mill setup it gives us the opportunity to use the threaded portion of the spindle end to properly preload the bearings.

Should I just go ahead and do that? and do you think I would get a good benefit by changing the brand, type, or quality of bearing? I was thinking of tapered bearings but that would most deffinately require a way to preload them so it'd be much easier if removing the mill setup and related gear as if I understand the parts diagram correctly there is a snap ring that attaches to the shaft that would essentially be preventing me from using anything on the threads at the end of the shaft to be preloading the bearings, is that correct?