When replacing the exhaust donut gasket, it's important to make sure the surfaces that the gasket will be sitting on are clean and smooth. The residue you're describing could potentially cause issues with proper sealing and could lead to exhaust leaks.
To remove the remaining residue, I would suggest using a wire brush to scrub away as much of it as possible. If that doesn't work, you can try using a chemical rust remover or a degreaser to soften and break down the residue. Be sure to wear gloves and eye protection when using these chemicals.
If you have access to a power tool such as a die grinder, you can use that with a wire wheel or sanding disc to remove the remaining residue. If not, you can use a hand-held wire brush or sandpaper.
It's not necessary to get down to bare shiny metal, but the surfaces should be clean and free of any large bumps or rough spots. Once you've removed as much residue as possible, wipe the surfaces down with a clean rag and make sure they're dry before installing the new donut gasket.
As for using a propane torch, I would advise against it. The heat from the torch can warp the metal and make it difficult for the gasket to seal properly. It can also cause the metal to become brittle and more prone to cracking.
If you have any difficulties with the repair, you can always consult a professional mechanic. They will be able to diagnose the issues and suggest the best way to fix it