Have you tried beating the cup with a hammer as you apply maximum torque to the tool? Sometimes the shock is enough to break the part loose.
A dremel is a tiny high RPM drill for which many attachments are available including discs for cutting through steel. Seems like your only remaining option is to cut a slot from the axle hole to the edge which will reduce the effective outside diameter of the cup allowing it to be freed from the frame. As it's hardened steel using a hacksaw will take an age so get the slot started with a dremel and finish it off with the finest blades you can buy. By fine I mean both quality and TPI (threads per inch). When cutting material with a hacksaw at least 3 teeth should be engaged on the work-piece at any one time. Use two dremel discs together to leave a wide enough slot for the blade. And keep the hacksaw blade well lubricated. Cut as close to the BB shell threads as you dare, cut as many slots as you like and then collapse the cup in on itself using your trusty chisel. And wear eye protection.
