There is a terrible rattle / marbles in a can sound coming from the circled portion. I assume this means I need a new cat or to switch to a mid pipe. My Mazda muffler seems fine, so I was thinking about installing the BHR midpipe or maybe trying to gut the cat.

 

The only way to be sure is to remove the cat and have a look in there.

If you have to worry about the emissions and/or the smell, get a used cat from a junkyard or someone here.

Otherwise you can just gut it.

 

That section is the resonator. It can collect debris from the cat as it disintegrates.

Before throwing money at the problem, disconnect the front of the midpipe from the exhaust manifold (3 nuts), and tilt it down so you can have a look inside. You may need to remove the middle and rear cross members (4 bolts) to get enough clearance.

 

Also, ensure the heat shield around the catalytic converter is not loose, causing the rattle you are hearing. A loose heat shield can cause that sound.

 

Ended up going with the BHR catless midpipe, and I am very glad I did.