I just had to tell someone: I finally got the stem out of my Bianchi Competizione. I've been working on it sporadically for at least six months. I soaked it in Liquid Wrench, in Coca-Cola and was about to try ammonia. I have to thank Roland DellaSanta, a local framebuilder, for the final solution. I sawed off the extension, disassembled the headset, pulled out the fork and heated the stem and steer tube with a propane torch until the old grease and corrosion inside started smoking. I then plunged the whole thing into a bucket of water. A few twists with the Vise-grips, and the offending stem was finally free, after at least 15 years. The moral of this story: always, always grease the stem! I hope this can help others with the same predicament. Now it's time for me to get a Nitto technomic stem and some bars wider than 40 cm.
Keith Weaver, in stormy Reno (over an inch of snow this afternoon!)