A 'hotwire' setup may work. It'd take some making though, nichrome wire from a electric heater, car battery, two wooden handles etc. Probably wouldn't happen...

Turps thinner normally turns polystyrene into snot, dunno if its 'styrene or polyurathane (sp?) though.

The scrap dealers do normally take the iron with the insulation still on it, just at a lower price. Is it worth your time?