That is a bump stop to stop your spare from crushing your tailight. It should have a little rubber bumper where that hole is, and should not be bent to hell. Is a good thing to straiten out and mount a CB antenna to.
Complete rebuild axle/engine/everything swap in progress:
Parts already gathered for assembly: 2001 Ford 302, 1990 Mustang GT 5.0 ECU and wiring, NP435, NP205, Pair of axles from 04' F350 SuperDuty (Sterling 10.5 Posi rear, Dana 60HP Front-Both Disk Brakes 3.73 Gears), 37" H1 Tires, 9" lift TJ Coils for 2 link conversion in front, Stage 2 Clutch Kit, 3 Row Aluminum Radiator, Chevy Astro Steering box (4" front Stretch), XJ Rear Leaf Springs (6" Rear Stretch), and lots more.