If I cut 5 inches out of the center of a sway bar, I have two shorter halves.

If it's a 3/4" OD bar, what if I got a length of tubing with a 3/4" ID, say 1/4-inch wall, maybe 4~5 inches long.

Push both sway bar halves together into the tube so they butted, drill a couple holes in the tube for each sway bar half,
and plug weld each half to the tube.

Do you reckon this would now still work as a sway bar ?

Don't do this.
Anti-sway bars are made from spring steel. Welding ruins the temper and "spring" it has to it. It will bend and stay bent.

what are you trying to accomplish ?
what vehicle are you working on ?
i'm sure there are budget options out there, but you need to establish a starting point what you are working with.

I need the bar shortened. I'm exploring whether or not this will work, and if it's cheaper than a custom sway bar.

Two spot welds on the very end of each half is probably not going to ruin the steel temper of the entire rest of the bar.

Another strategy might be to cut some female spines into each half, and spline the two ends back together. I don't know what this might cost either.
Some Jeeps have this feature, disconnecting the two front sway bar halves.

Why not give it a try, maybe add a couple of Grade 8 bolts at each end and keep and eye on it.

It will still work, but it's effective rate will be severely reduced and its mean time to failure will rise. Drilling holes and bolting would reduce rate even more and present additional stress failure points.

Sway bars work on the elastic modulus principles that allow it to retain its original shape despite being torqued out of shape. The modulus varies depending on the thickness of a solid bar, or if it is hollow, the wall thickness. By cutting a solid bar and welding a tube over it, you have effectively reduced the sway bars resistance to the wall thickness of that tube and now concentrated all those stresses to the cut point of the original bar. It will work, at a reduced rate, for some period of time. Depending on your driving style, It will probably eventually fail at those cut points.

You can get straight bars/tubes, with splines on the end and then use custom arms to interface with the splines and the control arms. Speedway Engineering is one company that offers these. http://1speedway.com/index.php?route=product/category&path=76

Thanks TC.

I thought about that race car stuff, no doubt it works well, I thought it might be pricey.

Rather than cutting and welding, I think I'd look around and see if there's an existing sway bar with the shape and specs that you need for any brand or type of vehicle.

FACT.
I took a sway bar from a 73-87 Chevy C-30 2wd truck and modified it to fit the front of my '70 Charger. The same car has a rear bar from an '83 Imperial.
I took a sway bar from a Chevy Tahoe and fitted it to the rear of my 2007 Ram 1500.
Be creative.

KernDog,
I would not be opposed to that at all.
I've found it's just very hard to find sway bar dimensions on the internet.
Did you simply find pictures ? How many sway bars did you go through before success ?
Also, what mods did you do, bending ?

Get a tape measure, go to the junkyard, measure till you find something that will fit.

That's what I did to put a swaybar on my 64 300 back in the early 90's, when the answer to all questions, aka the internet, didn't exist. Still works today.

That is what I did. I walked the yard and looked at different shapes and styles.
The Chevy truck bar was an easy one. I had an '84 Chevy truck when I bought my '70 Charger. I noticed that the shapes were similar. I bought one at the Junkyard and simply shortened each end and drilled holes in the ends to attach the end links.

More

That last pic doesn't look the same?
How did you taper the round bar flat?

The bar has curved arms/levers. I mounted the bar in the same way that the Chevy trucks did, with the curve pointing UP at the ends.
I tapered the ends using an angle grinder and a 40 grit flapper disc.

I see now, thx for the pics

To the OP...what are you working on? Are you trying to modify a front or a rear bar?

OP here,
E-body, I put in spring relocation hangers, each spring moved inward about 1 1/4-in, so the rear sway bar
needs to be about 2 1/2-in narrower.

Just have the ends bent inward

Won't clear the tire sidewall bulge.