Alright, just a quick update: I got further clarification from the shop that the thread is in fact stripped, so that's why they said they would need to drill and tap it out in order to rethread it. I feel like an idiot for misunderstanding it the way I did. In any case, they're confident it's an easy fix, but they will be taking out the turbo in order to do this.
So, I'm still mulling over my options between just getting this fixed for a fraction of the cost of getting a k04, or spend an additional 2K to get k04. I don't see myself selling this car anytime soon as I love my car, and i've wanted a k04 since I bought it.
I'm really tempted to go with k04 since they'll already be taking out the turbo, but I'm just hesitant on spending more on supporting mods, specifically a new intercooler, which i've read is a must. I think i've gotten over any concerns about smog implications from what people are saying, other than the fact I have to get a modified CCTA DP.
So anyone running a stock intercooler on their k04?