Alex, thanks, I’ve decided to start the project all over again. I should be able to do chop it up faster now.
As for the procedure, looks like the only way to properly do it is what I said in my first message. I hope this well help someone in the future:
1). FIRST you have to extract the audio from the video
2). ONLY AFTER THAT chop both up to your liking
3). Find the extracted audio in the Project panel
4). Right-click and choose Replace Footage
5). Locate your mastered/processed audio filed that has already been synced with the audio from video
6). Click Select – and there you go.