Its obviously possible to adapt the optics such that they focus the IR - its probably not even that difficult to do. The pump in a 5 mW green usually has enough power to light matches like that, but under normal operation (i.e. with the stock optics and crystals in place) it just doesnt focus to a tiny point in front of the laser.
Also, if things are built right, most of the IR pump energy doesnt make it out at all, it should be absorbed by the crystal set. IR will leak out more easily if the wavelength is off (e.g. cold laser).
As far as modding that core laser goes: I'd keep it and build or buy a 200 mW red laser for about the same price the core was... nicer to play with, less work and probably safer that tinkering with IR.
