Did you test-fit the carburetor by installing your phenolic spacer and then checking for any butterfly clearance issues? As long as there is no interference with the manifold, the larger bores of the spacer should have no adverse effect on performance. Only dyno-testing might confirm a slight difference, whether you use a 4-hole spacer, 2 ovals, or an open spacer, taking into account that they are all the same height/thickness.

Yes, you need to open up the venturi holes to match the spacer.  The lips under that spacer will cause terrible turbulence and be detrimental to your whole idea of getting the engine to run smoothly and accelerate smoothly.   That will allow the use of any of the more modern carburetors available.  If you stay with the four hole, then slotting the manifold to make a dual oval is not necessary.  However, you need to blend the bottom of the holes into the plenum to help the air/fuel turn into the ports easier.  Not a difficult task if you have a carbide burr and electric or air die grinder.  It is the little things that make any manifold work better.  Joe-JDC

JDC

Should I ask them to enlarge the 4 openings, or create the 2 slotted holes in the bottom picture.  What gasket would I use for the bottom configuration?

If you plan on using the four hole spacer, then have the shop open the holes to match the spacer.  Simply install the four bolts and scribe the spacer openings.  Opening up the plenum to dual ovals requires an open spacer to scribe the outside edges.   If you don't plan on using an open spacer,  then only machine the four holes to match the spacer.  You have several options with the four holes opened up. 1/4", 1/2", 1", 2" spacers are available with four holes.   Joe-JDC

JDC

Do you know the manufacturer of the 4 hole spacer in your picture?

Edelbrock, Summit, Speedway Motors, Jegs, have spacers in different thicknesses and configurations.  Aluminum, plastic, and phenolic.   Joe-JDC 

JDC

Another machine shop opened the 4 holes to match my phenolic spacer.  I was able to "re-tune" the carb starting from scratch, no more stall out on full WOT from stop.  I am working through a slight stumble from a dead stop, but I feel confident I can manage this.  No tuning (many hours) whatsoever got me this far with the other manifold