Yeah, that's what I was thinking of doing. Cut some slots into the side panel of the case and then have the fan on the outside of the case with a square cut out so that the air can get through. I'll probably use those cool masters that somebody was talking about earlier and then an 80mm fan that's pretty good for the normal spot that I have.
As others have said, there are half-decent cases to be had for $30-$50. Most of these will come with fans so you'd be upgrading two things at once (case and cooling).