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Use a scalpel. Don't do it in a hurry - just take your time with it whilst watching some tv or something.
Be careful removing the stitching, even after you've picked the thread - the holes can widen a fair bit if you're rough with it. I messed a couple up but it's not really a big deal. Overall I'm very happy to get a useful every day piece of kit out of something that I had stopped using because of the pad and that I would have thrown in the bin.
I'm thinking about doing this with some tights I have with a pad I don't get on with. Any tips / pitfalls?