I substituted the xacto knife with a plastic cutter but thanks to this guide, I now have a phone with both an extended battery and a protective case.
Here is the result:
Since the extended battery is stretching the silicone skin a bit it was putting extra pressure on the volume buttons thus making them not work properly, to work around this I made a slit under the volume buttons.
Volume buttons work perfectly now.
Ironically, this case makes it easier for me to press the power button.
My only gripe is the case design doesn't leave much room for headphone jacks (I had to cut off a little of the rubber around the connector on my cheap little ear-buds in order to make it fit) but that's a small price to pay for the peace of mind knowing that my phone is more likely to survive a fall.