Dremel is a cheap product. The flexible blade attachment you are thinking will drift on you if you are not careful. A rigid blade is better. Or something like this. http://shopping.yahoo.com/851915505-...blade-osc214c/
If it is soft a good utility knife and a pack of sharp blades to keep you going should work. Maybe even better. Trial and error for you I suppose.
Interior a utility knife and sandpaper is best imo. There are a couple of angled blades on a handle that are sold but haven't made time to test one of them yet.
Did you just guess at the time it would take to remove the old before doing all you did leading up to the actual start of the job? If it wasn't bid with removal and replacement in mind then I suppose you will have a better idea after this.
The benefit of removing old caulk v/s caulking over existing caulk is it gives you the advantage of being able to warranty against failing caulk without the risk of coming back again and again. Who knows what or how long the original caulk is going to last especially if it is already cracking. For houses with a lot of settling (coastal developements, sandy = lots of settling ) or a certain age on them it is a good service provision especially if you warranty it. If the HO realizes the potential to have failing caulk joints after only a short time and the disappointment it would bring after investing so much in new paint. Depends a lot on house location, age of home, ability to communicate this properly and HO budget.
How long would you warranty against joints becoming exposed due to failing caulk? Long enough that a HO would want to buy it? That would be a good thread actually I am curious what everyone would say to that and the caulk they would use.