The GI sight will work, fine, Led, unless it's 1000 yard competition you're going after.
I've had a couple of 03s and 03A3s. The peep will do well, and getting better accuracy is more a case of bedding, trigger and load work.
I've seen, but not used, a GI peep with the aperture threaded, and a hollow screw in it of a smaller ID. Bet it can be done with a Williams or Lyman aperture also.
I'd leave it alone...