Remove laser engraving?

Why not look on eBay (or other site that sells iPod parts) for an old iPod backplate and change it over?

Removing any type of engraving and still leaving the iPod looking nice is going to be near impossible unless you have access to specialist buffing tools and compound and a lot of patience.!

You could try taking it to a metal-working shop and having them grind it out. Won't be pretty but it will be gone. That is if the metal is of sufficient thickness to withstand the grinding to that depth, but the shop can tell you that.

That is a good idea Jeff, but on the 2nd Generation it won't be a backplate he'll have to replace the entire case assembly

Good point!

That is a good idea Jeff, but on the 2nd Generation it won't be a backplate he'll have to replace the entire case assembly: http://www.ifixit.com/iPod-Parts/iPod-Nano-Gen-2-Case-Assembly/IF199-005

ifixit doesn't currently show to have any and rates the process as difficult, plus the cost is a bit steep to me. I guess a Google search might help him find one elsewhere. Seems a lot of trouble to go to.