Here is what Joe Wagner used to do.. this is from Engine Collector's Journal Vol 1 #4
Click on the this link
http://www.modelenginecollecting.com/The-Model-Engine-Collector.htm and then click on Volume 1 #1
read down to bottom of page 5 ..."Tricks of the Trade"... "an almost fool proof method of extracting screws."
It involves making an "easy out" out of 1/16th piano wire.. and using a drill press .. very interesting reading ... Joe remarks this is a "one time shot" with this set up and to take your time..
The Nitric Acid technique sounds interesting.. I remember dissolving pennies in Chemistry Class with this acid..
I don't recommend using a dremel on this engine. I don't care how careful you are.. it will cut into the case or at lest mark it up. I tried it on an OS 35 S case .. the screw is still in there.. the metal on the screw kept breaking. In my search for a way to get it out I came across this article ...
Also... Clarance Lee might be able to help.. I am unsure of this info. It came from the Engine Collectors web site.
West Coast
HELICOIL REPAIR of STRIPPED SPARK PLUG HOLES (¼-32 only), REPAIR 0F 4-40 & 6-32 HEAD and BACK COVER HOLES, GENERAL MACHINE WORK: C.F. Lee Mfg. Co. 10112 Woodward Ave. Sunland, CA 91040 Tel: (818) 526-9074
Here is another guy... East Coast
ENGINE RESTORATION, REPAIR and CLEANING SERVICES, NICKEL PLATING, TUMBLE POLISHING: Walter Craig 3664 Smoketown Rd. Glenville, PA 17329 Tel: (717) 229-2840 E-mail: makenewagain@yahoo.com
Jim