Directly under the mast is a pretty critical area. You really want a sound foundation for the mast. And recoring that area is not a difficult task. If I was in the position you are in and not in the total refit position like I am this is what I would do.

Your mast step is probably 8" diameter, so draw a circle around the step so you know where the outside diameter of the step is and another 5" diameter circle in the center of the place where it sits. cut the top skin out in the area of the 5" circle. This will give you free access to the rotten balsa. The rot may extend beyond the 5" area but you should be able to fix that as long as it does not go too far. Then dig out the rotten balsa. Sand of any bumps from the top of the bottom deck skin but don't sand anymore than you have to in order to make it reasonably smooth.

Now if you had to dig out rotten balsa between the top and bottom skins of the deck around the perimeter of the 5" diameter cutout you need to fill that area with thickened epoxy. I would use some microfibers to give the epoxy more strength and cabosil (also called fumed silica or aerosol) to thicken it to a peanut butter consistancy. Then with a putty knife force this mixture in around the perimeter of your 5" cutout to fill the void between the skins of the deck. Let this set up before going to the next step.

The next step is to grind a bevel around the 5" diameter cutout. You want to grind the deck to about a 1/16" thickness next to the cutout and make a smooth bevel up to the point where the 8" diameter mast step is.

Now you are ready to start putting things back together. The first step is to cut 5" diameter circles of biax (I use 1708 biaxal cloth) to fill the area where the balsa used to be. If you use 1708 biax it will take approx 7 circles to fill this area to the same level that the balsa used to fill it. Next you need to cut circles that are progressively larger to bond back to the top skin of the deck. You need to make one circle 8" diameter, another one 7" diameter another one 6" diameter and depending on how thick your deck's top skin was possibly another one 5" diameter. These circles will bond to the beveled area of the top deck and tie it all back together. As you epoxy these larger circles in you want to put the LARGEST ONE down first which will give you a continuous bond of the entire beveled area and the recored area below it and follow with the next largest and so on.

When all this prep work is done you are ready to mix a small batch of epoxy and start putting things together. First wet out the area of your repair with straight epoxy and then start putting the 6" diameter circles in one by one and wetting them out as you go. If you run out of epoxy just mix another batch and keep going. When all of the 5" diameter pieces are in place and totally wet out put the larger circles down in the order mentioned above and wet them out completely.

After your repair is fully cured you will have a few high spots that will need to be ground down flush and some low spots that will need filling to make the area fair. So do the grinding and then mix up some more thickened epoxy with cabosil to a peanut butter consistancy and fill the low spots. You may need to do the filling operation more than once (after sanding the filler smooth) to get all of the low areas. When all of that has cured you will have a solid mast step you will never need to worry about again.

While this is how I would fix the problem your milage may vary
Sail on ~~~_/)~~~_/)~~~