Tear it down? Rewire? Sure, the homeowner would agree to that ... just remember - that's asbestos cement siding you're looking at.
It seems that sometimes you just can't win!
Tell the HO they have to call a vinyl contractor when you're done.
I'd go inside and, HO permitting, cut the drywall/plaster and lath out of that area to cut the box off the stud, then push it out and go new in the hole (that is if the new box fit the hole.)
Hmm, then you gotta call the plasterer
and the EPA...
None of this solves the problem of the not-big-enough-for-the-wall-wart problem though.
Ian A.