i am guessing, really. that looks like a helicoil and is probably steel? that is inserted into the aluminum.

I cant verify that, but if that is the case, you might be better off turning it out and replacing it, than tapping into the aluminum one size bigger. The one thing i can say is your oil pan solution will probably work well since you only to to thread the new drain once.. so i think your ok there. use a good thread locker too.