Why do you want to change it? All outboard model Catalina 27's came equipped that way. So, unless you're planning to go blue water sailing, or just want to use the space for something else, there isn't a huge reason for changing it. Look at my pictures. The biggest inconvenience is that I must remove the motor cowling to get it tilted up into the cavity. Notice, though that I have a Tohatsu remote control, electric start motor....... well worth it, the convenience of an inboard. I considered modifying the hole years ago after looking at some other owner's projects. Just never got around to it.... quite frankly.. I'm used to it now... I leave the motor down when sailing.... except for the few times we've raced... then we kick it up.
That said, it's an easy modification. You should be able to do it in the water.
I would use battery powerd tools, for safety. (or, at the very least have a GFCI breaker on the power tool circuit. I have a portable GFCI plug I keep around the boat for just that purpose)
I'll answer some of Ross' concerns: Since you're in SoCal you are probably at a floating dock marina. Position the boat, stern in, so the transom is right next to the dock. You can lay down side ways, on the dock, and reach the area at the bottom quite easily.
Needless to say, don't sit with your feet in the water... even though you have the GFCI breaker in the circuit.
For spills, you can also rig a small shelf "bib" at water level to catch anything... tape an edge to the boat and put some floatation under the shelf.
I suggest you go to the owner's site....
www.catalina27.org for lots of info on these great boats. There is a list of owner recommended upgrades and retrofits that you should study and compare with your boat to see what's been done or not... and take care of these issues right away. Spreader brackets, Chainplate retrofits, through hull upgrades... etc. These are more important than the outboard mount.