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As for replacing your exhaust at the engine, I'd like to see a few more pictures right at the point of attachment to the exhaust manifold before making any solid suggestions.
If it is like you say and it's truly threaded straight into the manifold, I'd been tempted to saw it off very close to the manifold the chisel out the remaining pipe. Next, if there are no threaded holes for a manifold flange to be bolted to, I'd drii and tap a set in so I could use standard equipment from then on.
Again, that is an opinion base on a lot of assumptions drawn from the limited info so far, so please don't consider it a "cast in stone" solution.
Rick.
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 Just another Ol' Guy living the dream... :-)
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