Well this was how I did it engine in situ, although my rot didn't look quite as bad as yours does initially.
I dropped the sub frame bolts out and slackened everything else off I thought might restrict things.
The reason I left it in was to aid alignment so I could keep trying it back in as I went, the gearbox chassis also needed replacing so this helped that alignment as well. Yes eventually the engine will come out, at present I'm short on storage.
Opening it up gave me a decision to make over the tube it was in good condition at the top be was weak towards the bottom. I cleaned it up and built up weld around the small area it was thin, once the bottom plate had been located to its final position.
Cutting out the inner leg and marking it up was easier once the bottom plate was in. All the bottom edge was holed.
Then once marked up cut out and weld in. I had to make some adjustments to how it curved down, nothing difficult.
Then seal it up in the arch with another piece in the kit. The end I left open as I want to get in plenty of rust protection.
It could be done in any order you just need to determine where to start to keep a reference for it as you go. From this stage you could then replace the top (I didn't need it) and put a new tube in, either once the bottom plate was in leaving the top to reference against also.
Well you get the idea!