You'll need to be able to get at the sill from both the inside and the outside. If the inside is drywall it will be fairly easy to open up. Not sure what the outside material is. Usually the outside material is more difficult to open up. I'd start with the inside and use a zawsall to cut nails and pull out the sill plate. You can then prepare an new sill plate (suggest pressure treated material) and drive it into place. Be careful about using too much force when driving it it place. you will crack stucco and other areas if you're not careful.

Gardenguy's idea are good, I guess he means a reciprocating saw? I don't know if this is a good DIY job though, it's major and structural, and must be done properly.

Pressure treated's a good idea, and you should take action to kill any remaining colonies, get in the experts.

No simple answer and you won't know the full extent of the damage til the walls come off.....but don't delay, and don't skimp.

if the house is jacked up properly, problems should be minimal, and it's better to suffer a little now, than have major sags or collapse later.

Don't take the lowest bid unless the person really knows their stuff - repair/renovation is 10 times harder than building new.