A Bic lighter would have done as good as a pencil torch.
You could take the axle out to make it easier to grind the back of that stud. Maybe you won't have to grind at all, but removing the axle will at least allow you to get in there to do something.
Let's hope it'll be able to come out with the drum/rim still attached. Maybe someone else has done it with the rim still attached and can say definately one way or the other.
I removed one once with the drum/rim still attached to the axle, but that was because the axle shaft was twisted in two, so the C-clip wasn't doing anything to hold it in.