Once you elected to drill it, you owned it. You can't return parts that have been changed or modified by the buyer. The distributor no longer has anything to go on for the reason of the defect. He can't return it to the manufacturer because the manufacturer will say, "but it's been drilled. How can I tell that it wasn't a customer error? Sorry, but you, the distributor, will have to eat this one."

Perhaps you received a bad prop, but faulty judgement in continuing with the prop in an effort to correct the original probem closed the door on a return. Cold and hard, but that's the way it is. Unfortunately your only option is as you noted. Buy another one and check it before proceeding.