Plumbing – Cast iron pipe is too low to a use gasketed toilet flange replacement

You're going to have to cut out the pipe, and replace it with PVC drain pipe. You can get rubber connectors (fernco) for the transition.

Here's a youtube how-to: http://www.youtube.com/watch?v=EFaJyIzyiYA

For cutting the pipe, go rent a chain pipe cutter (aka soil pipe cutter). It will make short work of the pipe and not be too messy. It will make a clean enough edge that a Fernco coupling (like you have a picture of) will work fine.

Obviously you will need to add some strapping to secure the horizontal run of iron pipe if you go this route because you don't want to put any extra strain on that rubber coupling.

I would not mess with trying to remove the flange. I think it will be easier to just cut the pipe.