I have never worked on one of these engines, so am just guessing from the pictures…You mention that the pinion will move up and down on the driveshaft, are you sure? You also mention wish you could remove the prop shaft bushing, which I understand….It would seem as though that bushing is getting in the way of pulling that pinion down and off the driveshaft….But, Frank points out that there is that C clip about the driveshaft that would prevent you from pulling it up and out of the gearcase until it is removed….
So, I am thinking that there is a way of sneaking that pinion out of there without removing the bushing, perhaps the pinion is stuck somewhat on the driveshaft because I don’t think that bushing is removable……

Sounds like you can not get the gearcase off the exhaust housing….But, this should not stop you from removing that pinion gear. You say the pinion moves freely on the driveshaft, so it seems as though it should come off. Is the pinion actually getting jammed on the bushing? With that clip in place I wouldn’t think there were be too much driveshaft movement inside the gearcase, but who knows…Perhaps you need to pull that gearcase down off the stud/exhaust housing, then perhaps the driveshaft will have more end play and it you will be able to move it upwards a bit more so the pinion can be snuck out past the bushing. The driveshaft spline fit into the powerhead limits upward movement of the driveshaft with the gearcase in place on the exhaust housing….
Again, I have never worked on one of these, but I’m sure normal service procedures do not require removing that clip before the pinion can be removed. Can you see the clip with the pinion and driveshaft all the way down?