I have never seen a 1 1/4 axle that had a step down. I would stick the axle in a lathe and turn the ends down and just recut the groove with a cut off wheel or get a new axle and swap out bearings and hubs too match everything.
I just ordered a step down axle from bmi but it is 1" to 3/4 so I could use a 4 on 4 golf cart wheels. They have another step down axle but its not that size.
Maybe you could use a 1in, and use some pieces to step it up to 1 1/4 where it needs to be.
Ive seen adapters for 3/4 to 1in. Surly there is something for 1 to 1 1/4. Probably need a handful of locking collars to keep it all in place.