There is product on the market which looks and feels like grinding paste that can be quite useful for removing stubborn and damaged screws, you just put a little into the slot and it seems to grip the screw better. I think it's called 'Screw-Doctor'!
It's not 'Screw-Doctor' but EzGrip and is marketed as an aviation product.
See:
EzGrip :: screw extraction, friction drops, screw removal