Agree it is best done off the engine to keep the chips out of the coolant. Since the threads are tapered you should be able to run the tap a little deeper than original and restore adequate threads. It will take some care to get the tap started right.
A good hardware store will have individual PT taps. Or get a complete set at HF for reasonable cost. I have found the HF taps to be fine for clean up and touch up work.
If you decide to tackle the other nipple while it is out heat helps... heat the nipple cherry red and touch a candle to it while hot. Let cool and it should come right out.
just a little caution on restoring tapered pipe threads. try to only go a thread or 2 deeper if you can. if you go too deep, the casting will have to be machined to restore adequate clearance from bottoming out on the shoulder[end of the threads] of the fitting. when the shoulder bottoms out, the fitting WILL leak. over 42 years as a machinist, i have had to repair many, many castings that have been "fixed" by tapping pipe threads deeper to restore boogered up threads, and sometimes castings are ruined because there is not enough material to reface the casting after cleaning up the threads.
