Preway prefab removal or fit insert ?

Thanks to this forum I realized my Preway is a pre fab that can not be used with a decent sized wood insert. I am considering a Quadra fire 4100 or a Clydesdale but there are so many choices, (something which may get a tax credit would be nice also). My main floor is 1600 sq ft. but the fire place is in a room that is 450 sq ft. The heat will seep into the other rooms and upstairs odviously. My Preway heats the main room fine with a ton of wood burning real hot. I want it gone for a more efficient insert and I have no problem ripping it out.
From what I have been reading from the treads on this site my prefab will only exept a smaller insert.
My question is do I need a large insert for my space or will a smaller unit stuffed into my preway be sufficient ? I would rather have a larger unit that I know would heat my area instead of a small one working real hard like my junky biulders box.
If I remove my Preway what prep does one need to do to safely install a decent insert, I have no problem doing mason work for the job?

Any advice would be a great help.
Thanks, Mark

Thank you both for the advice, I would like to stay away from a free standing stove and use an insert for space reasons and aesthetics. I found the below pdf online yesterday and this option for removal looks like a good way to remove the Preway and do some mason work for the insert. I have an exterior chase on my house just like this place (see below link)

http://www.jlconline.com/public/articles/2003/0311/0311repl.pdf

My prefab unit has a huge draft which comes in under the unit from the outside air when not in use and this could be corrected with a good insert as well.

I have done brick chimney repair and laid a bit of concrete but have not built a mason fireplace box, this could be more than I want to handle.

I would think (and correct me if you have a more informed opinion) cinder block the exterior wall of the house on the sides and above the location of the new insert and finish it off with a nicer face brick on the interior. And then use cement board to line the inside of the side and back walls of the chase box aprox. 8 feet high.

Or would this give me a freezing cold insert when not in use just like my prefab?

Any thoughts?

Thanks again any info greatly appreciated, Mark

By saying "box" do you mean a 3 dimensional box or my hopes of the sides and top with block?
Thanks