I have used M7 helicoils in several places on PRV's. They
work, but I'm not too particularly fond of them. I have not
had a need to repair threads for exhaust manifolds (yet :-)
I picked Rob Grady's brain on these issues, and he told me
he uses a brand of insert called "Timecert" or something
like that. I looked them up on the web, and what I've seen
so far looks superior to any other thread repair I've seen
before. It's actually a sleeve with a shoulder. It comes
in two versions for each thread size -- regular damage &
really beat-out nothing-left-of-it damage.
Don't sweat going to an M8 bolt. It might actually be a
more durable repair than repairing the block to the original
thread. I'm surprised that you have enough gasket left to
compress in there. It seems they usually fall apart when
they leak.