Yuck. Sounds like it's going to be more effort (and expense) than it's worth. But in order:

1. It may take a 1-piece American-style crank. Harris Cyclery has them (and associated BB parts) or you can get a kit that turns it into a standard 3-piece English compatible setup.

2. You can file or hack them off. Probably torch too since they're just brazed on, but I stay away from fire to avoid burning my hand off.

3. I would try to get cozy with the Bic again. Failing that, buy or rent an angle grinder. Be sure to grind it off outside or in a designated shop area as it will leave little metal filings EVERYWHERE and they'll find their way into your feet.

4. You can sand it down, sandblast it, or use naval jelly or airplane stripper (I don't know what the Army uses).

But after buying a new front wheel, cranks, BB, stem, bars, seatpost, saddle, pedals, stripping agent of choice, paint, and angle grinder, you'll probably be in the hole versus if you'd just ditched that (hey, sell it on Craig's List for $20 and count that towards a complete) and bought an old quality "10-speed".