Everyone has their own way of doing it.
I have seen several different ways:
1. Opening enlarged just slightly at the bottom and more at the top. Looked pretty good. Not sure what is involved in this.
Pic of method #1:
http://www.sound-in-motion.com/images/jpg/tahoe/002.jpg
2. Dividing bar between radio and climate control cut out and stereo mounted right on top of the climate control. Some people didn't think it looked that bad, I thought it looked like total ass. I wouldn't recommend doing it this way considering how bad it looked.
Pics of method #2:
http://www.chevyavalanchefanclub.com/cafcna/index.php/topic,44389.0.html
3. Inner structure modified, climate control lowered, and stereo mounted about where it's located in an 03+. Then an 03 bezel was installed with some trimming needed for it to fit around the climate control and some trimming at the bottom to allow access to the ashtray and 12v outlets. Looked factory. If you can find a junked 03+, you can also just swap the radio/climate housing to save yourself a lot of custom work, but they are really hard to find. Last link below has pics of the swap.
Pics of method #3:
http://www.chevyavalanchefanclub.com/cafcna/index.php/topic,46758.0.html
http://www.chevyavalanchefanclub.com/cafcna/index.php/topic,60410.0.html
http://www.fullsizechevy.com/forums/showthread.php?t=202952
I don't know why they used 1.5-DIN, but GM had been using that size since the early 80's and just kind of stuck with it until the late 90's.