So you want it to look like the 2nd picture? The jamb extensions, if factory attached, are usually stapled in and can be removed.

All the trim can be removed without harming the window itself. There will be a lot of labor to cut back the drywall, install new drywall and new thin trim.

looks like you would have enough room to put trim right in top of the jamb. The stool would need to come out.

+1. Might be tight on the latch side but you would definitely not have room on the stool.