Air impact chisel to cut the head off. Knocking the rivet out is an entirely differrent matter, best bet would be to drill the rivet out with progressively larger bits.
I had to deal with this sort of thing a month or so ago when I had to repair a ball joint on my car. The ball joint was riveted (1/2" rivets) to the end of a control arm. I knocked the rivet heads off with an air chisel, and ended up taking the control arm into a machine shop to have them press the rivets out. The rivets were in so tight/rusted, that they were unable to press them out without damaging the control arm.