The International Cessna^® 170 Association

Can anyone tell me what's behind the panel to the left of the left yoke? There appears to be enough flat space for another 3" instrument but is there intereference behind it?

Also, I have seen 170's certified IFR. But with no vacuum, I'm going to assume the original type certificate did not certify IFR. Or does the plane predate such certification?

In short, how did these guys do it?

I've been working with an avionics shop on a way to do the work without destroying the classic look of the panel. But beyond that, am I in for some bureaucratic headaches to fly it legally?

Several message/topic threads here already discuss this matter.
The original airplane could leave the factory either VFR or IFR certified. The IFR version has a factory installed vacuum system utilizing dual venturi tubes which drive vacuum horizon and compass gyros. An electric turn and bank, and a sensitive alitmeter and vertical airspeed indicator and the appropriate radios filled out the package.
Contrary to some "modern" mechanic's opinions, venturi vacuum systems are legal and, if properly installed/maintained, adequate. Heated pitot is NOT a requirement for IFR certification, but a heated pitot may also be installed. The original was a Kohler straight heated pitot similar to the C-195 installation. Some owners have opted for later "L" shaped pitots found on more contemporary aircraft.
I do not have a heated pitot. I do not fly in icing condiitons in my 170B. Not because I do not have a heated pitot, tho'. That would be the lesser of my worries if in icing conditions in this airplane.

Not knowing/seeing your instrument panel I have no idea what's behind it's left-hand side. The original airplane had about 9" of depth available there for instrumentation. You should personally inspect your airplane and you should obtain an Illustrated Parts Catalog to see how the factory intended things to be.