I have a 2005 and as you can see by my sig I just added a .020 shim turned out the mixture screws a tad and added a muzzy pipe. Even in this configuration I'm probably getting around 5 hp more than stock and it sounds and drives much better. I wouldn't get a pipe without at least at the minimum drilling out the mixture screws and opening them up a tad. You'd be suprised what a 1/8th to 1/4 turn out does for driveability. To take full advantage you really need a jet kit though. I paid about 200 bucks US for my muzzy and I'm happy with it. I'm sure you could at least do the same with jet kit for around $350 if you do all the work yourself. Way under $600 that you were thinking. Even if you paid someone to do it I can't see it going much over $500.
And you're right the stock pipe does sound like a sewing machine, but more importantly it's restrictive and heavy as hell. My GS750EF with a Yosh pipe has double the size hole and it's almost half the displacement. I believe the exhaust is the worst culprit on the Stock Bandit for robbing power, then the intake snorkle size.
Also as I said the stock pipe is heavy as hell. At least 20-25 pounds. My muzzy with mid pipe weighs 8 pounds on my bathroom scale. So you are also shaving of 12-15 pounds just by getting rid of that monstrosity on the bike. When you take it off you'll realize that the outer diameter is just for marketing(?), the actual hole that the exhaust goes through is half of what the outer pipe is.
And Ranger is right, it is a sealed one piece unit. I guess you could cut the shroud off with a welding torch then pop the rivets but why bother? It's still going to be crappier(and heavier) than just picking up a nice slip on.