I had complete success extracting an Ali saddle stem from a steel frame recently using caustic soda. If I were to do it again (and having to do this once teaches you never to have to do it again!) I would strip the frame as the caustic soda solution found its way along each tube and out through water drain holes all over my derailleur, wheels and steering spacers; all aluminium! Caution - this method does not remove steel stems from alloy frames, unless you weant to keep the seat tube and throw the bike!
To do this properly, strip the frame and then plug all exits with rags except the bottom bracket and the seat tube end. If the saddle stem is hollow through, plug the end of this with a cork or tight rags - cork is best to create a seal. some saddle stems are closed ended so this may not be a problem.
Turn the frame up-side-down. You will pour the caustic solution CAREFULLY down the seat tube via the BB.
You can get caustic soda from most Chandlers or DIYers. Mix it strong - it will get hot and it will spit so watch out for yourself. Wear protective clothing like I didn't. I did however wear safety glasses - ESSENTIAL protection as this stuff BURNS.
Pour the solution from a plastic jug down the seat tube until full. It will fizz and froth out so it may be a good idea to wrap the seat tube in rags to take up any spent solution. Be careful if you want to keep your paintwork, though mine was fine. Leave it overnight.
Next day, drain out the spent solution and repeat the process; maybe once in the morning and change the solution last thing at night.
After three days of this, give the saddle stem a twist. Chances are it will buckle and you can work the remainder out with a screwdriver beng careful not to mark the frame.
Messy but it definitely works.
Disclaimer: if you bugger up your bike remember - I am not a professional and this is only a write-up of my successful procedure.
PS: this will destroy your saddle stem.