Drop the exhaust first of all, it only gets in the way! Cut it right after the first support after the muffler, eliminate the up over and down.
Unless you have an aftermarket exhaust that already does this.
I wouldn't use the torch to cut out the remainder of the bolt. But a nice red-hot heatup job, then a nice quick quench with some water on the bolt might weaken it enough to chip it out and/or drill the remainder free. You run the risk of weakening the surrounding metal tho. In any case, sounds like you are gonna have to mount it differently than the bar-pin.
Or say fsck-it, and cut out that whole area, weld in some plate, and reinforce/make bigger/better/badder the whole area.
Or 6010 welding rod makes a great gouging rod when the amperage is turned up beyond what that diameter of rod should be run at.
eg 3/32 or 1/8 running at oh, 150+ amps. Heh, start slow (around 120), you don't want to disintegrate the surrounding material!
Just some ideas. If you want to keep the threads on that hole, you are hooped. But eliminate the bar pin, and you should be golden.