Alter table modify column on a huge table containing more than 25 million records
You should only need to drop and recreate the affected NC index. 

Saying that, on a test server, you can see the differences in doing this compared to your strategy of dropping all indexes above.

I reckon dropping/creating the single index would be quicker overall because the data will be shifted around twice otherwise: once char to varchar, another to build the clustered index. Then you have the NC creation overhead.