Well, scrap Option 1. Here's the sequence:
I started with the kit-supplied "B", cutting it out and taping it to the cutting mat.
I then securely taped a scribing template over the part I wanted to trim and began tracing the outlines...
...until I got the cuts I wanted.
Then it got exciting. The decal came off the sheet beautifully and, when I applied it to the model, 4 things happened in quick succession that convinced me this option won't be pursued any further. First, the decal was a bit too transparent, showing the green patch distinct from the brown camo. Then it became evident that the B was too wide as it entirely obliterated the "3" in "FR2350" unlike the pictures of Eddie's plane. So I quickly sliced the B in half vertically with a sharp x-acto blade, hoping to overlap the halves and thereby narrowing the letter. As I did this, things 3 and 4 happened simultaneously. The sliding of the decal with a wet paint brush revealed that the decal was very brittle and started breaking apart. On top of that, the FR350 decal dissolved a bit, revealing the inadequate seal coat. The below is the unacceptable result.
I will now lightly sand off this set and start again. Luckily I have another FR350 decal which has now received a coat of Future to seal it better. The one that was applied on the port side also got a better seal coat. I will now try to print the HS-B code outlines on a sheet of white decal paper with a slightly yellow tinge and a darker outline, which I'll use as a cutting guide and see how that goes. If that doesn't work, I will mask and paint the codes.