Ok. I am understanding a little better as I go along. I started grinding the black collar. Once I get that off what is the method to get the hardened plate off?

You grind just enough of the black collar to be able to pry the hardened plate off.
Once the plate is off you will be able to see the lock mechanism barrel - (where the key normally goes). You drill into the lock mechanism barrel. Bits and pieces will come out.
You do this drilling gingerly until all the barrel mechanism is completely drilled out and removed.
When the barrel mechanism is gone you will able to peer into the hole that's left. You will see a slot at the end of the hole. Put a flat blade screw driver into the hole and turn the switch to position 1.

When you have the switch in Position 1 this release the steering lock mechanism. While in position 1 you can use the lock removal tools - generally I use two pieces of thin coat hanger in the two holes that release the black cover and the rest of the remaining lock mechanism.

So once the hardened plate is off, I just drill directly into the keyhole? how deep should I go? What size drill bit?

I use a 10mm drill bit. Just drill gingerly. When all the loose bits come out you know your done. The lock barrell mechnism will break up into bits as you drill it.
http://farm6.staticflickr.com/5044/5...178ca307_b.jpg

See this image? You are drilling the insides out of it. The case will be left behind after you drill out the lock mechanism. At the bottom of the case will be a small slot which you can fit a flat blade screw driver in.

See the flange at the rear of the unit in the image. This is part of the mechanism that releases the steering lock.