If the bearing cones deteriorated to the point of massive friction, it could have locked up with the cup causing it to spin inside, which could soft ream the hub to the point where it would no longer be able to pressure fit the cup.
Moped Lar's advice is solid if you intend to rebuild to original specs; Loctite can be removed or sanded down if the rebuild doesn't work out to your satisfaction. But replace the axel, cones and bearings with new because that whole 11MM axel setup is way under engineered for the wheel.
I think it's very important to avoid causing further damage to the wheel - gouging the cup fitting surfaces could ruin any option to convert to sealed bearings, which is really the best thing to do anyway. 12MM axel conversion makes snowflake wheels the best moped alloy wheel setup there is in my opinion.