I got it!  I didnt even need to really drill a hole in it.  There was already a tiny "pilot hole" in it, so I drilled halfway into the plug before I got scared of damaging the screw.  I then went to home depot's screw area, and lo and behold, there was a nice sheetrock screw sitting there on the floor!  Guy in orange apron told me it was fair game for me if it was on the floor, so I took it.  Screwed it into the little hole on the plug and used the claw on my hammer along with lots of padding to pull it right out.

Now for the spacer mod!