As soon as you have this part removed, it's time to clean up the cut. You have to make it straight and smooth. This is simply done by laying sandpaper flat and rubbing the waist piece back and forth with the side you just cut against the sandpaper.

The next you want to do is check to see how much of the plastic you need to shave to get the waist to attach and still rotate. Using an Exacto knife, cut away roughly the areas you see that needs to be to allow the waist to work. Once it's roughly done, fire up the Dremel with a sanding bit. Start sanding away at the waist to get the near final shape ready.

Now you need the peg that is still attached the waist that the legs came off of. Cut the peg loose along with the plastic surrounding it. Clean it up and get it so that you see the peg and more less a rectangle box as the base.

The new waist you have already done steps to fit in place needs to have it's top smoothed out and putty added so that you have a flat surface. This takes time due to letting the putty dry and getting the surface perfectly flat. Once it is done though, you will be ready to glue the swivel peg on.

You need to place the peg into the G.I.Joe figure as if you were reattaching the legs. With just the rectangle piece sticking out, this is the part that will hold the glue and attach to the waist. Making sure the longest parts of the rectangle is front to back, pre fit the wait so you can see how it lines up and get an idea where you want it to rest once it's glued. Now simply apply the glue and attach the waist.

With luck it went in place without sliding off center. This will cause a weird rotation if it goes off center. You can now use the Dremel to sand more on the waist so you get things exactly the way you want it. You can also place the small bit into the Dremel and carve in the detail. Again use an untouched figure to go by for the best results in duplicating.