So I got the tool, got the bushing and set out to do this task today. I am sure the tool would work great. However my issue was that the extension housing bushing went inside the transmission so there was no bushing at all locating things. So I ended up removing the tailshaft anyways and that wasn't a bad job at all.

I have no idea what would have caused the old bushing to walk forward into the trans. It didn't spin and it looked just fine.