A dremel would do an awesome job. Of course, I am a giant dremel whore and use it for everything so maybe I am biased.
EDIT: Adding some possibly helpful stuff after taking a closer look.
Looks like a Moen Bayhill.
The plaster guard, which you have forgotten, is there to make sure that the valve is in the correct position. It is not technically a required piece as it does not affect the function of the unit.
That being said, it does not appear as if your valve is seated correctly. It should stick out of the wall quite a bit more than that in order to be able to access the cartridge retaining clip. In fact, it looks like it is recessed so far back that your handle won't even attach properly.
Check out this horribly long-winded video (skip ahead to about 1:15) to see how it should be sticking out from the wall.
[ame]http://www.youtube.com/watch?v=B4k438w-tDs[/ame]