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In a past life I used to repair impeller housings for the marine industry. I was constantly dealing with snapped off stainless steel studs and bolts that were bonded to the housings from the salt water.
There are many ways to tackle this, some may be better than others.
I would at least give it a shot before removing the head.
I am not sure about your car but can you release the motor mounts and possibly tilt the engine using a floor jack to get some more room?
Can those lines be moved out of the way?
First and foremost, you must be extremely patient. As soon as you start feeling anxious, you need to walk away, take a break, gather your thoughts and come back at it.
This procedure takes finesse or a certain "feel" if you will. The last thing you want to do is break off a drill bit or an extractor inside there. Furthermore, don't even think about using cheap tools! Forget Harbor-freight, craftsman, or the likes. Find a snap-on truck in your area. Most of the time you can meet the snap-on guy somewhere on his route.
DO NOT USE THOSE CHEAP EZ-OUTS they sell at the hardware store.
First thing i would do is try and move the stud with a sharp high quality pick. Even if you can get a turn back in, that would be a great start.
You can also try and apply some heat to the area around the stud. A little heat can go a long way.
Couple the heat with a bit of penetrating fluid as well.
It's hard to tell in your picture but in order to get the center on a broken bolt or stud, you may need to grind the top flat a little so your center punch, drill, etc doesn't wander due to the irregular surface.
+1 on the left hand drill bits also. Start with a small bit first. Like superman suggested, I have personally experienced stuck bolts or studs extract during the drilling process.
Remember, you can always cut the drill bits down in order to help with the clearance problem.
+1 on using the air tools as well. I find the electric drills and rotary tools are harder to control or "throttle." You'll probably end up bouncing all over that stud with an electric tool.
You can find a reversible right angle air drill. They are not too expensive.
While you are drilling, use a good cutting fluid. I like "tap-magic." Take you time don't go too fast or let the bit get too hot or you'll end up breaking the bit.
It may also be a good idea to have a spotter if possible. The spotter can help you make sure you are drilling as straight as possible by looking at the process from another angle.
This would be my first plan of attack.
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