Classic crevice corrosion.
Chromium in stainless forms an oxide barrier on the alloy, once that barrier fails, corrosion however microscopic, will begin. Calder presents it as anytime there is an oxygen deficiency at the surface of the metal it leads to the oxide breaking down. In the case of the through bolts they simply got exposed by the years of movement, expansion and contraction of the wet wood led the sealant to separate from the steel, and exposed the steel to perpetual moisture trapped in the hole causing the metal became active and corrosion ensued. if your in altitude in UT there is even less oxygen than at the beach, so it stands to reason it might fail sooner, but that's splitting hairs. I'm sure the engineers on the site could give you a better explanation, but that my feeble minded interpretation.
I would guess the originals were 316 s.s., but yeah stick with your plan use the most austenitic steel you can find.
It did look like there is some moisture (rot) in the transom wood in you picture.
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there's no such thing as normal anymore...
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