I drilled it out while it was in the door. If you're really paranoid, put a large flat piece of wood behind the arm so you don't slip with the drill bit and hit something bad (ie. the door skin)
If you use a sharp bit, you won't have any problems. You are correct that the only way to get it out is to drill. If you look at the new one, you'll see it how it looks before it gets "mushroomed". It is basically rivetted in and like rivets, it must be drilled out.
Let me know how yours turns out and/or email me if you need any more tips or help.. I'd be glad to help!
Neal Bhatt - email@example.com
'83 300SD 193k