John,
I think I would work toward modifying the rear sight blade before I started working on that front sight. My 629-1 is upstairs in the bedroom right now, but I have my 629-5 sitting here on the computer desk. If your rear sight blade is like the one I have here in front of me, there may be between 1/16th and 1/32 of material there between the bottom of the notch and the top of the adjustable sight frame. You might be able to lower that notch a bit and then likewise take a bit off of the top of the sight blade. This should lower your point of impact. By how much - who knows? My elevation screw on this 629-5 is slightly domed... Something like that might need to be flattened just a bit in order to not stick up in front of the newly lowered notch.
I would certainly try to modify the rear before I went after the front blade... You can buy a new rear sight and/or blade, but the front sight on our 629-1s is an integral part of the barrel. Later variants had the pinned on or quick-change versions that help correct situations like you and others haved faced. But that front sight is a one shot deal when it comes to modifying it. If it gets messed up, it's new barrel time. I do, however, like the Wiegand front sight base for S&Ws that is out there. It allows you to change blades, and several variations are available, including a large blank that allows you to make whatever you want. It takes a good 'smith or a good machinist to install the base. But once it is on the gun, you can set yourself up with a wide variety of front sight blades: 25 yards, 50 yards, a big ramp with gold bars inlaid for various distances, a nice black Patridge type for shooting pins, etc.
Jack Wiegand no longer does 'smithing work, but he does have someone that he recommends for the installation... I can't remember who it is, but he lists the gentleman on his web-site. Weigand is a class act... He answers his e-mails personally, and cares about his clients. He also offers a cool replacement rear sight blade that was originally designed for competition, though I am contemplating putting one on my 629-1 since I use it mainly for distance shooting now - you can get it with various notch widths. With his interchangable front sight base, a set of blades for the purposes at hand, and his rear sight blade replacements, there isn't too much one couldn't accomplish with a good old model 29, provided his marksmanship is up to the task.
BTW, your Hogue grips look great... I am in a bit of a quandry right now trying to find "the" set of grips for this 629-5. I have a whole other thread going on that situation. Hopefully I'll get that solved soon...
Regards,
Mike