Thread is old - but the situation is frequent, so here is the success story of removing a frozen Pivo stem from a Motobecane frame.
Three methods were tried:
1. Thread the top of the stem (where the bolt goes), screw in a bolt, turn the bike over, and use a slide hammer to pull out a stem. Failed, but we had a relatively small hammer - with a larger hammer it would have worked.
3. Next thing, we pounded the stem *down*, into the tube, to break the bond. That worked - we gained couple of millimeters. Then..
2. Turn the bike over, place the top tube on a good support, closer to the headtube joint (resilient, but pliant- we used a large thick fiberboard panel, but vertically placed 2x4 or 2x6 will probably to just fine.). Cut a piece of wood on a angle (we used thick plywood; solid wood is likely to split), so it fits nicely into the bend of the typical quill stem from underneath (of course, now the bike is upside down, so the angled stem underbelly is facing up).
This is obviously a better arranged variation on what we all tried to do - just use a mallet to pound the stem out. This doesn't work since you are hitting down->up, bike jumps up, etc., and besides, you are hitting handlebar clamp, which is not good enough. Turn bike over, support it from underneath, and use a wooden piece to transmit the blow to the right spot, just where the stem body joins the extension...