No matter how far I dug down or to the sides, I kept coming up with wet rotten wood. Not good at all. I could see it was time to take the gloves off, and really dig in to the project wholeheartedly.
I dug up the number and address for "Boat Buider Central" and gave them a call. Great, they'll at the same nearby address. I stopped by with a couple pics of what I had found sofar and asked their opinion. They told me pretty much what I had known, that all the inside wood would have to come out and replaced with new, as well as new inside fiberglass, possible stringer damage, cut back floor area to gain access, etc., etc., etc.. I bought four sheets of their recommended replacement plywood, epoxy, and plenty of glass.
Back home decided to go ahead and cut floor section out from transom towards bow around 12"-14". This would be a good area that would be the least actual cutting/repairing of visible gelcoat splashwell floor/side area. This is because in this area there is a removeable cover hatch on floor about two foot long, and two battery compartments, one on either side, that have teak covers on them.
They also told me I should cut section of topsides(cap) off, which would make it much easier to construct transom core as one unit and then install/epoxy it to the existing transom fiberglass hull skin, which is in nice shape. I just didn't have enough faith in my ability to reinstall/repair the visible cap section without it looking shbby, so I elected to build the transom in the boat, one sheet at a time. More on that to follow.