Eric,

I have just finished doing this on a '56 Beetle to add a rag top to my car(which just by scale is different then doing a Vanagon).  But, If I were going to do the same thing on a Vanagon, That is what I'd do.  The nice thing about cutting through the pillers is that you can weld them back together nicely without the worry of warpage that you get when you weld on a large, flat panel.

I wrote up a little article for my local VW club newsletter and can send it to you if you'd like to see it. This is for reference only (I am not a professional body man, just tinkerer).

Roger