What is your design code, ASME B31.3? What are your design conditions, like pressure and temperature? What is the medium, fluid service, material of construction, etc.?
One important aspect is the area reinforcement calculation. As per para 304.3.2 (b), calculation is required for this opening in the run pipe. Removing the end may make the fittings a non-listed one, requiring analysis per para. 304.7.2, but I think that's overkill. In the end, you couldve also made this modified half coupling from pipe. The 1.1/2" half coupling roughly equals a 2.1/2" Sch XXS pipe. Either way, you satisfy Code requirement as long as the calcs show there´s sufficient reinforcement. I dont see a problem with removing the 0.25" end. Make sure the internal weld reinforcement doesnt protrude too much into the half coupling causing the level switch to jam when inserting it.
Another aspect to consider, which cant be answered from your OP, is the service with respect to use of threading. B31.3 has provisions for the application of threads. However, the Code doesnt consider all aspects of your service. Therefore, threading should not be considered for certain critical services, like high temperature, lethal service, cyclic, etc.