Hi,
I dont think the heatsink is really needed. Although the chip is getting very hot and is managing to warm up my heatsink pretty good. But alot of people are using these devices without one. I choose to release the straign on the chip. First I downloaded the datasheet which states the chip brakes down at a junction temprature of 150 degree (C). So I knew it would be safe to skip the heatsink. Hoewver I choose against it in an attempt to lenghthen its life.
When you can still toutch the chip without burning you can be sure the junction temprature is below the stated maximum. It's beyond the scope of this reply to explain junction temprature and I'm not the best person to explain it to you.
I'll post the pics of my finished mods tomorrow. The photo's are already taken but I am in no mood to get them off my camera right now

As for cutting the case. It is a matter of opinion and guts I guess. I would avoid it at any cost since it will never look as straight as something out of the factory.
As for hot glue guns. I got mine for a dime at a local DIY store. Take a look around. You need no military spec. glue gun to do this kind of project

BTW This is my first message posted with a real A1200 by me on amiga.org. That scandoubler is working great!