Success! I used the burs to grind of the bolts closer than I could get with the drill. Finally, a little daylight...
The powerhead was still stuck and with no place to pry I came up with a jackscrew jury rig using a 1/4" extension and one of the powerhead bolts. Backing out the bolt forced the powerhead up...
Old hole below, new hole above. Really needed to get this close...
Free at last, free at last...
Bolt was literally cemented into the hole...
Hopefully the worst is over. Now to find a replacement adapter. As a last resort I think it might be possible to salvage this one. I'm trying to decide if I want to make this a winter project and pull the rest of the motor off and do paint and whatnot.
Thanks everybody for the help and advice. It is appreciated!