In that location, I'd heli-coil the hole. Reason being that it's where the lifting ring attaches, and you don't want that to come loose when you hoist the engine. Also, use the longest cap screw that won't bottom out in the hole with the stack-up of the lift ring and the ground strap.
A quick fix for a 5/16 UNC hole that is stripped out is to tap it for an M8 metric cap screw, which is about .005 inch larger. Not really a proper fix, particularly with the lifting ring to consider.