Well "IF" you had it square the first time, cutting it off and re-welding it again may not guarantee it won't do the something again, because you'll have to stress relieve it again, so it could do the same thing. I'd suggest two ways to trying to deal with it. First connection it up with a lap joint flange. That way it wouldn't matter how far off your flange was the lap joint flange could rotate to match. Or I'd try what you suggested heating up the piping to see if you could get it to rotate the 1/8". Trick here is not to try to do this in only one spot! You'll need to heat up the whole leg of piping to pass that rotation through a large length. My $0.02 anyway, Good Luck!