I have fixed this two ways. The first time I was able to put a nail set against the side of the hole that had worn in the grommet and pound on it until the hole rotated to the side. The second time, I put a pair of needle nose pliers through the grommet, pried them open hard and rotated the grommet until the worn spot was at the top.
Just a note, when the rope broke in my M7, caused by a worn spot in the grommet, I just clutch started it and started to ride out. The tail end of the rope that had wound back into the starter case got wrapped in the flywheel, took out the spring which then got wrapped in the stator and flywheel. Not cheap. If the rope breaks and winds back into the case, I would recommend taking the entire recoil starter off before you clutch start.