My method was just as some others have mentioned - I used an exacto knife (after roughly pencil marking the area to be gouged out) to clear out some of the foam. I did several passes at digging out foam and test placing the model in the gouge.
One piece of advice I can give is .. after you've finished the foam cut, placed the model in the gouged out area and put gel medium on the surface ... glue the foam to a base immediately!! I waited a little too long (a couple of days) and the foam piece began curling up due to the drying out and shrinking of the gel. I managed to glue it down OK on a wood base later ... no harm no foul.
This image is before final touch-ups and the addition of the wood base:
