The silencer is normally cut out yeah, and a replacement section of pipe welded in. If you can get hold of an OEM silencer I don't see any reason why a good exhaust place couldn't weld it back in for you.
A flat spot is there on most 197/200 even when standard, but any exhaust mod can exaggerate it. Putting a silencer back in should improve things, but there may still be a slight flat spot there