Sorry, I have to make a correction. The release bearing I used was indeed a different part.
What happened was, I bought a replacement through IMC (or something like that) when the bearing went south. I pulled the transmission out, and found out that it took out a couple of diaghram fingers with it.
Since I needed to replace a pressure plate and I really didn't have an inclination to take the tranny out twice, I decided to get a light flywheel/clutch kit from Metric Mechanic.
At this point, I did try the replacement bearing. It felt loose (about 0.025" radial clearance), but I didn't measure it.
The flywheel/clutch kit arrived, with another release bearing. Although they looked identical, I decided to use the one included in the kit, thinking that there may be some difference that is not apparent.
Turned out, they were different indeed. This one had larger bore size. It had about 0.100" clearance, so my estimate of 1/8" was pretty close.
So that's what happened. I apologize for the confusion.
Anyway, 0.025" clearance on the replacement bearing was still a bit more than I liked, especially with the new pressure plate that has larger center "hole" that is defined by the tips of diaghram fingers. There isn't much contact area between the bearing and the fingers (though the area does increase as the clutch pedal is depressed).
So I ended up using the big-bore bearing, and made a sleeve from 1.625" x 0.134" HREW round tube I had laying around. Clearance now is 0.006", which I feel much more comfortable.
Car is running now, and I can honestly say that I recommend light flywheel for these cars. People at Metric Mechanic was very pleasant to deal with. I will send them an e-mail to thank them for their superior service, as well as to raise my concern about the bearing clearance.
P.S. I don't work for Cisco.