Send it to a machine shop while they have something very easy to position to and they will put a drilll right down the center of it, the treads sghould just peal out then.
Friend of mine bought a cheapish plasma cutter to save some time in his workshop, reckons it doesn't and wouldn't bother again and just stick to the 4½ grinder.
I had a 1.2 transfer box on my 200TDi for 5 days, it was bloody awful. With the 1.4 box on it will tow 3.5 ton trailers over the speed limit relativly easily but the power delivery isnt there for a 1.2... 5th became almost obsolite when unladen.
The transferbox is a fairly simple thing to change, if you and a mate can hold a spanner between you then you'll be able to change it yourself.
Carbide have a very narrow band where they work properly, surface speed, feed per rev and depth of cut. And that's assuming your using an appropriate grade. Get any of them wrong and it won't look good.
I've got a Demand Engineering exhaust on my 200tdi, granted it's a defender one, not sure if they do one for conversions but there a great company to deal with so don't hesitate to get in contact with them.