From a More Beer Customer Service Representative
"Thank you for your inquiry. I have done research into the issue and found that the product is indeed made this way. It is a cast piece of metal, so as long as you maintain the high standards of regular brewing sanitation, then you should have no problems with the piece. If you have any questions or concerns please let me know."
While Im not expecting pharma quality, electropolished stuff for under $3, I cant justify using this as is. I guess nipples are one thing not to get from there.
So I took the dremmel and the little sanding drum and tried to smooth out the inside of the rough nipple. To my surprise, after about a minute of work it was really smooth and shinny. Then I took the little buffing wheel and polished the inside with BKF. All in all it took less than 5 minutes to do. Now I feel good about using and cleaning it.