I think Calif-Steve was the first to suggest increasing the rear sight setting, I must keep credit where it is due, but it appears to be a good fix given the situation.
Personally if it were my rifle I would try a group with ammunition you plan to keep using, and measure the vertical error, then measure the foresight that is in place, do the math and purchase the correct front sight blade.
I do agree with Patrick on filing the sight, one thing I did find with Mauser sights is that blocky pyramid shape isn't the most crisp to begin with, filing could easily make it worse.