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I think you need to remove the whole thing. That's what I would do.
Sometimes when people face a problem they've never dealt with, their solutions are limited to what they have on hand or what they've done before. I feel this is a short sighted approach, particularly when you're dealing with something that is expensive or rare and the chance of ruining it is too high.
If I had this problem of removing the remaining piece, the first thing I would do is take a bolt of that size down to my favorite machinist and have him make me a drill bushing out of it. It would take him about two minutes, cost me maybe five dollars, and then I would have something I could use to drill accurately through the center of that hole. I would then hit the stud with some heat, and remove it using an easy out.
Ironically, when I first saw this thread the other day, I was dealing with a similar situation. I wasn't working on an engine case but I was working on a used part that had a bolt snapped off in a hole, and within two hours, I had the thing out and was on to bigger and better things. Trust me, you can get this thing out.
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