You can easily cut away the old insulation and cut new insulation to fit where you removed the old. However, the difficulty of doing this is outweighed by the ease of purchasing a new oven.
I would suggest that you do not replace the oven insulation. The time any money you put in would not be worth it. It would be best to replace the whole oven. A professional would be the best one to replace it if you want to keep the oven.
Get some scissors and start cutting away at it. Just tear it all out of there. Then go buy some new insulation and start taping it inside the oven. Make sure you don't cook and eat the tape or something!
