I don't know about everyone else, but I don't think I have ever made a pen that didn't have some flaw or mistake, no matter how small. Most get fixed and end up not visible, but it takes extra work. Rarely one goes in the trash. Nice recovery on your $20 guitar!
Back on topic, you might want to take some notes to find out how thick your finish is. Probably only have to do it a couple of times to get where you want to be. Measure/record your fitting, the sanded diameter and your final polished diameter. It will give you a good idea how deep to cut past the fitting dimension on your next pen. For me, my finish is pretty thin. If I can slip the calipers loosley onto the blank, I know I am good to go for the finish. I take a lot of CA off in sanding because I go after every dimple and ridge.
If it doesn't match, general consensus is better to be larger than the adjoining fitting, as you did. The metal edges are very obvious on overturned blanks.
I vote for Pen #2
although the flames are tempting.