Bathtub Faucet Replacement Problems

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In our kids bathroom we have some "apartment grade" faucets and fixtures that I have been replacing, they are about 10 years old and are delta products. The bathtub faucet was a pull down (at the spout) system to turn the shower on. When you pulled down the piece, the shower would come on and when you turn the water off, the piece would retract. I basically rotated this by hand to remove it. When I looked at the faucet inside it has a long plastic threaded sleeve.

The pipe from the wall sticks out about 2 1/2 inches and has a (I think it is a fitting) piece over it that has threads on the front for the faucet. It looks like something that basically goes over the pipe to fit this old faucet. I'm not a plumber so I'm not 100% if it is welded or not.

My new Delta product I purchased (models 144913, faucet pn#RP48718) has a totaly different set up with an allen wrench screw underneath to tighten the faucet to the pipe. There are no threaded sections on the new faucet. It simply looks like you insert the pipe from the wall into it and tighten it down with an allen wrench.

I am wondering, does that fitting or (whatever it is) piece over the pipe from the wall remove? If so, is that something that unscrewes? I tried to give a little pressure with pliers but it didn't budge and I didn't want to break the pipes. Any suggestions?

Thanks. Jeff