Just to follow this up...
After investigating the situation, inspecting several other circular saws I have, and finding that newer models use 5/8" arbor blades with flat spindle washers I went with the simple, cheap and effective fix. I ground off the flange on the inner spindle washer. The 5/8 arbor blades fit the spindle very snugly, just like other saws. The non-flanged washer is just like other saws. This saw has worked perfectly after the mod and allowed me to do a bunch of long rips of 3" thick hard maple slabs, which is the whole reason I needed this saw.
Thanks for the tips, especially downsizingnow for your comment about the other saws in the model line.
Rob
P.S. If anyone wants the two 3/4" arbor 10.25" blades I have which are no longer of use (both need sharpening) let me know.