Yea, I have done the search but haven't got a great answer for how to do this. I gather there is a capacitor that is designed to fire the bag even without power from the fuse. Any idea how I could disconnect this? Also how about just removing the bag from the wheel? Is this easy to do?

Removing the airbag from the wheel is harder than you'd think. It requires pulling the steering wheel lock out, and disconnecting and feeding the wiring harness up throught the tightly packed steering column.

To disarm the airbag, you need to pull the fuse, and disconnect the yellow airbag wire which is under the dash behind the kick panel (4 screws, 2 hex, 2 phillips). I always disconnected the passenger one too which is also behind the passenger side kick panel (just push clips). The whole thing takes about 5 minutes.

... yea, what he said.

Do I need to disconnect the battery to do this? Is there a risk of the bag going off if I don't?

... no need to disconnect the battery, just pull the fuse and undo the wiring.

Will the SRS light be left on when thisis done?

The red airbag light will remain on after the car attempts to check it. Then when it realizes the airbag isn't functioning, the orange "service vehicle" light will remain on.