Chris, you should absolutely cut the trim. It is also well worth tapping the house out and figuring out how far the rot extends too. Realistically you are likely going to have to pull the handrail to be able to tie the new plywood in. Typically for repairs like these I tap out the ply until I am into good wood and then use a skillsaw to cut free the bad wood. Well doing all this it is worth paying attention to make sure you don't accidentally lose track of the sheer in the house, in particular if your not careful you can add a hard spot where the new work ties into the old.
Nicholas