Probably a poor repair attempt after shearing a stud at some time. Failed attempt to drill out the remains resulted in an oversize hole which has been tapped one size larger.
Easy enough to fit an insert at some time in the future, if the head ever comes off or the engine comes out, but for now, I'd forget you ever saw it, if the gasket isn't blowing.
I guess your diagnosis is correct, I was hoping to replace the gasket/heat shield which is disintegrating slowly, without having to disturb too much else - looks like it may become more involved!