How do I remove window sill / apron overhang?
I would agree with #2.  Sealing it up would be easy with some spray foam or caulking.  You would have to put some type of flush trim on to hide the cut, or chisel out a bit more of the sill and piece in some sheetrock and mud it and/or change the window trim to a picture frame casing.   Not really a hard job, just not sure what you want. I would like to see what you want the seat to look like in relationship to the window. How much lower than the window do you want the top of the seat to be?