Making unsightly union girl heartless with one, one in a story (12)

I believe the answer is:

uglification

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'making unsightly union girl heartless' is the definition.
I can't judge whether this defines the answer.

'with one one in a story' is the wordplay.
'with one' becomes 'ugli' (I am not sure about this - if you are sure you should give a lot more credence to this answer).
'one' becomes 'a'.
'in' means one lot of letters goes inside another.
'a story' becomes 'fiction'.
'a' put into 'fiction' is 'fication'.
'ugli'+'fication'='UGLIFICATION'

Can you help me to learn more?

(Other definitions for uglification that I've seen before include "Alice never heard of such a thing!" , "Giving nasty looks" .)

I've seen this clue in the Sydney Morning Herald.

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