We extend the previous work on 3D black hole excision to the case of distorted black holes, with a variety of dynamic gauge conditions that respond naturally to the spacetime dynamics. We show that in evolutions of highly distorted, rotating black holes, the combination of excision and the gauge conditions we use is able to drive the coordinates to a frame in which the system looks almost static at late times. Further, we show for the first time that one can extract accurate wave forms from these simulations, with the full machinery of excision and dynamic gauge conditions. The evolutions can be carried out for a long time, far exceeding the longevity and accuracy of better resolved 2D codes.