Just finished my mod and I am happy with the way things turned out.
Started out with reading Mistercrash's thread, who supplied a boatload of info on swapping diffs. So I started out with taking the diffs apart to change the cups to traxxas shafts. As described in other threads I simply cut off the threaded area of the original traxxas axles that I kept in my box of spare parts. I cut approximately 1mm past the threaded area, and it resulted in a perfect fit. While I had everything open, I changed the diff oil to 60K front and rear.
I then took my time using a dremmel to grind out material from the bulkheads. After an hour of test fitting and adjusting I finally got them in.
I was a bit worried about lost material from grinding out the bulkheads, so I'm experimenting with a method of adding material to the outside area of the bulkhead that was affected the most. I used a urethane adhesive, and hopefully it will strengthen that area.
I decided to use my traxxas CVD center drive shaft, and connect it to the Losi diffs using this Losi diff drive yoke: