I installed new flooring. The existing toilet flange is recessed - see picture. The flange is glued into and existing outlet and I don’t see a way of removing it without cutting the pipe lower down and making a new outlet. An alternative is to cut the top of the flange and add a new flange with a smaller outlet - there are flanges that fit within a 3 inch outlet. Would this work? Also, would I need to build up the subfloor or can I still have it recessed?
A half inch of space isn't very much. You can probably use a normal size wax seal and be fine or you can go with a extra thick seal to be sure it seals properly.