If you can pass inspection w/o a muffler, do it.
Gut your cat, but hollowing out a empty muffler cant be better than an actual straight pipe. Maby a straight pipe IN the muffler, ok, but ahollow body? bad.
The gases are HOT and take up LESS cubics and the hotter the gasses are the Higher their velocity can be. They also rotate because of the turbo, adding non circular and large heat transfering things in to he exhaust path is bad.
That said you have to do what you have to do. A muffler defiantly wont kill you. The magnaflow muffers are pretty muchs traight through. I would not suggest a super 44 or any other chambered muffler. The day after i bought my crd i put a super 44 on it and was unhappy untill i got a straight pipe. If it had been a magnaflow i think i would have been content. Whatever you do, gut the cat. Use a floor jack handel or pole or pipe and beat the snot out of the insides untill you get ALL of the crap out.
You can make this easier by bolting the opposite side of the pre muffler flange to it's opposite side.
I would then cut the pipe 2 inches after the muffler exit and about 1/2 way between the cat (that is gutted) and the flange. And put in a straight pipe. measure it and go somewhere and buy 2.5 inch pipe and throw it in (get it cut)
If i could do it all over again i would do the above.
and i would be happier a long time ago

you wouldn't happen to have pics would you? Also what does gutting the cat actually do?