I am in the planning stage of building up the Type III russian kit I got from Chamberlain. I think it would be a shame to weld on, or solder on the Muzzle nut on this relic forever.

So what I thought was, to buy another Muzzle nut, tap it for a small set screw, grind a small detent in the threaded area of the muzzle, attach the muzzle nut and the set screw, and then spot weld over it. Come September of next year I just hunt up my dremel.

Any of you see a problem with this ?

What about the "ears" that the bayonett catch grabs ? Would a spot of weld on that area that would  keep the bayonett from locking on be enough for the JBTs ?

I believe the welded pin is OK by the ATF.  The Bayolugs will have to be ground off.  But they can be restored without too much trouble IF the ban ends.  A MIG welder on low heat can build up considerable metal which then can be machined into a new lug, or you can just buy a spare gas block with the lug, just in case you "need" it later.
 I'm in the planning stage as well.  A couple of e-mails to Mike Friend at Fireingline have not been fruitful.  I'm resigned to getting a receiver from him as a base for the restoration.  I'll have to do considerable work to recreate the lightening cuts over the mag well that make these guns so distinctive.  I can't find bayo lugs on my gas block.  It dosen't have them!  Hmmmm.  Stay in touch.

Your Type shouldn't have a Bayo lug, it should have some little ears on the bottom on the FSB, unless it a real early 47, supposedly the AK-47 Bayo was not introduced until 1951.
The Bay sort of wraps around the barrel in front of the gas block.

Hmmm. It's dated 1954.  The front sight base looks like the regular front sight... No ears, no lug, just the capture notch for the cleaning rod.  I really have no interest in bayonet lugs anyway and would only get a bayo for it as a curiosity.  
  The tough part of this build it the rail along the left side of the receiver by the top cover.  I can't figure out how to reproduce it without warping a Fireingline receiver into junk.  Ah well, I probably won't even start to work on it till after x-mas, so I have time to think about it. My milling machine is not up to milling a center section complete.  I might try this route if I can't find another way. I could mill two pieces of angle iron, carbonize them for strength, then weld them together. The weld would only be visible inside the trigger guard area.  Then weld in the regular lower rails for the sheet metal receiver. It's a possible direction to go.  This build is really going to be a challenge!
  By the way, did the bolt ramp idea work on your Saga?  Sorry to hear 'bout your rifle's trip to Kansas.  What a waste of time.

Hmm ... Maybe your type II has a type I front sight ? I have of never seen a type I or II, outside of pictures, but in Ezell's book the picture of the type I has a a front sight without bayonet ears on it. Sometimes the aresenals didn't read the collectors books, so they built them wrong ;), or perhaps it was a armourer replacing one sight with another.

Do you have enough of the front and rear receiver stubs, so that you could section a donor milled rifle and TIG the pieces together ?

Campy's suggestion about the trunnion worked.

The thing about SAI that really pisses me off is not so much that Gary is a crook, but that so many people helped him perpetuate his frauds.

Best of luck on your project !