@acudavid I agree with the others that the tool to use would be an oscillating multi tool. IF you have to do that repair.
I agree with
@jeepbluetj. It could just be failed fairing material the diver saw. Fairing material is a putty type material used to fill in gaps and make rough areas smooth, "fair". Then it gets sealed with an epoxy sealer and bottom painted along with the rest of the bottom.
I had an area on the front of my keel a few inches below the keel joint that looked real bad but just turned out to be bad fairing material. I was able to grind out the bad fairing, install new, paint over it with some barrier paint, then bottom paint. Relatively easy.
Here is a link to the fairing compound I used.
Total Boat Fairing
"The only evidence of any problem is in the bilge compartment of the V-berth. There is evidence of repeated salt water exposure, including salt deposits that would attract wildlife in the mountains. It almost looks like someone sprinkled sea salt there."
The forward end of the bilge ends at the compression post. Are you talking about bilge far forward in the v-berth area? Sea water can enter that area from a leaky anchor locker drain, the drain hose or thru hull. That small bilge does not drain into the main bilge so any water in it just sits there until it evaporates, leaving behind salt crystals.
How do you access the thru hull valves for the head? On mine there is a removable panel on the port side of the v-berth floor that gives access to the thru hulls. My transducers for depth and speed are also mounted there. Check around any transducers and the thru hulls and valves for water seepage. There should be a limber hole, "drain hole" in the aft/center most corner of that compartment to drain water to the bilge.
"How do I confirm that the bilge needs to be ripped up?"
When you confirm that water is entering the bilge from around 1 or more keel bolts. I would dry the bilge, then build a small dam of plumbers putty around the keel bolts to see if water builds up inside the dams or outside. With the amount of water you're finding in the bilge, it shouldn't take long to confirm it is or isn't coming from up around the keel bolts. If it is, then you probably need to do the repair IF YOUR BOAT IS PRE 1988 MODEL YEAR. Starting in 88 and newer boats, they stopped using plywood.
Also if you notice sagging of the bilge floor due to the wood becoming rotted and no longer supporting the bilge floor.
Another sign may be if you fix the smile by grinding out the crack, filling and fairing properly and the smile returns.