The true answer - from a manufacturing and technical point of view - is "Bore" as Peter Twissell says. A fixed body with a tool describing a circle - passing along the axis - will give a truely aligned and circular bore. Anything else may or may not be as good. But for models, it is true that some designs can be "forgiving" - I.E. they can manage a very slight taper, eccentricity or whatever, as they are never going to need to do the thousands of hours of hard labour that the original enegines did. Also, it depends on whether you have an hydraulic seal requirement (like a brake cylinder or suspension strut on your car) or have piston rings, or just a groove or 6 for a labyrinth seal. Again, is it a compression engine or steam? - that makes a big difference as to what you can get away with. Tighter tolerances needed on single acting IC pistons - for sealing - than maybe with double-acting steam engines? (You can't see the piston blow-by leaks inside the steam cylinder, but can detect the loss of compression on the IC engine!).
Also, please understand: any cut (like drilling, reaming) with a multi edged cutter in a hole has a microscopic tendency to "wobble" and cut a surface not unlike the outside of a 20p or 50p piece: with 1 more "Point" than the number of cutting edges. In fact this devious cutting process can be utilised to cut square holes with a 3-fluted tool, hexagonal holes with a 5-fluted tool, etc. So the reamer will produce one more (partial flat" surface than the mumber of cutting edges. But the surface variation may not be a problem (or visible) on your 1/2" bore steam engine. - But may be significant on your 50,000rpm aero- engine 2-stroke! Especially a 1" bore over-square engine with slipper pistons.
Here's one from Mass production manufacturing: Car engine blocks used to be "just clamped" and bored at low temperatures (bags of cold coolant). But "Modern" practice is to have the machining coolant and parts at 85C (Or similar engine operating or thermostat opening temperature) and clamped to exactly simulate the clamped condition of the block when builty with the head, crank, sump frame etc. fitted. This is so that the distotion caused by assembly and normal running temperature is set into the cylinder-metal before boring. So the bore is "true-er" at operating conditions and reduced running-in is required... which means a prolonged lifetime. When I was 13, we re-bored car engine blocks typically at 20~30,000miles... where I worked. Nowadays, no-one expects to need that! 150,000~250,000 miles is common for today's cars without a re-bore. We worked to toloerances of a few tenths of thou' when grinding crank journals - using the vernier on the barrel of the micrometer - the mic kept in your overall pocket for "constant temperature" in the hot or cold workshop... Today - with air guaging, lazers, etc. and CNC feedback for constant measurement, the crank journals are ground to fractions of the tolerances we used. Bearing shells (broached), Pistons (diamond tool turned to od "clever" shapes), piston pins, etc. are manufactured then measured and sorted into grades at assembly - as the Designed tolerances of assembly (microns) are smaller than the variation of the latest manufacturing processes. So don't bother trying that at home - unless home has a workshop that makes Formula 1 engines!
But enjoy what you can do! - I do!
K2
So consider your application, skills, and tooling ability (Money?), and based on tolerances you can achieve, select the most appropriate results = to leave yourself "Happy without regrets". I select Models and jobs I can do well, rather than a challenge to make something that needs tolerances beyound the capability of my tooling and skills. (e.g. a taper between the head and bed of your old lathe probably is beyong most people to improve - so don't try and make something that needs better tolerances than your tools).