I didn't have a Dremel when I did this. I believe I just pushed the rivet through as far as it would go, and used a file. You're essentially just filling off the burrs that were put in with the peening until you get the remaining rivet back down to its original diameter. Then it will slide right out.

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1987 300SDL 265,000 mi.
1982 300SD 325,000 mi. (and holding)
1956 Packard Clipper 150,000 mi.