I never have done it with forklift tires, but had to remove the foam from a couple of front tractor tires. What worked for me was cutting the tire itself with a Sawzall, all around the circumference and then across the tread, so I could get most of the tire off, leaving the beads. Then I attacked the foam donut with the sawzall and some pry bars, until the foam came loose in several large pieces. The beads are still fairly hard to remove from the rims, but eventually I was able to pry them off.
Like the other posters, I would worry about ruining the strength of the rim if I burned the tire/foam off. Also, in my area burning ANY tire would probably get me in trouble with the air pollution control folks. I just would not even consider burning it off.
You wrote that the tire is cut real bad. Depending on where the cut is, the foamed tire might work just fine like it is for years, unless the cut is spreading or if the tire is flapping and rubbing on the machine. The solid foam should hold just about anything up, but if the tread is not there, the smooth foam will have poor traction on anything very slick.
Removing the old tire and foam is not an easy job, but it is probably one most people could accomplish. The second one I did was WAY easier than the first one, because I had some idea of how to do it. Good luck!
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