I don't have a notch in my kettle lid, I just leave it off. Yes, there's an increased risk of contaminiation, but if you pitch a good healthy yeast into the chillled wort, I don't think there's anything to worry about.
If you do decide to cut through the lid, a dremel tool with a cutting blade might work, but you'd probably spend an awful lot of time doing it. A hacksaw would work too, but if your kettle is anything like mine, it will take a lot of work. (I'd rather spend my energy brewing and drinking beer. )
my lid isn't cut out for my chiller. i just plop the chiller in and slide the lid over as much of the opening as i can. it might leave a 1/2 inch opening at the widest point. nothing to get too worried about.