You can certainly rebuild the mating surface to better seal the helicoil, but you're getting into a difficult area. To do it right so that it would withstand the combustion chamber pressure seems to me would cost more than a new cylinder by quite a bit. However, I've never tried it, so someone with the skills, tools and experience may be able to do a fine job for little cost.
This problem has certainly come up a number of times, and people have claimed to have successfully repaired the threads with thread inserts (like Helicoils), simply restored them with a tap or rebored and tapped them for oversize nipples. There are also examples of such repairs that didn't work out. It all depends on how much damage there is and the three wise men: tools, skills and experience.