Yes i have heard of such tools too - here in NZ there is a product called 'ezi-out' where a hole is drilled smaller than the bolt stuck in the head and you put like a tap wrench in there connected to a extractor type tool that 'winds' it out.

Remember though - this all sounds well in good in theory but the bolt snaps because "it's in there". If these 'extraction' methods prove worthless you may have to drill and re-tap the block.

If you want to go the backyard-cowboy method and have 'nothing to loose' beacuse it looks like you are going to have to retap it anyway - try smacking a slightly smaller socket over the top of the problem head bolt - get a real tight fit over it and try turning it, it may just cause enough grip to turn it..

I find that when i put my head bolts back in - dab/smear some oil around the thread - i think this stops them from binding/ceasing into the black thread...

Just a thought...