Kevin, if a person is boxing a section of a C channel, they are welding a plate to the 3/16 edge of the channel. Most of the plate is in midair. The elliptical shape/fish mouth is in midair. It will do nothing to alleviate a perceived stress riser.
I understand what boxing a C channel is. We're just going to have to disagree about how it will increase stress at the end of the boxed section, elliptical cutout or not.
I do agree that welding in a boxed section for a mounting bracket is not the correct approach for the OP. The vendor should fix their screw-up.
