I want to release an audio fingerprinting software project under a free license, but the repository contains copyrighted audio files. The test cases also currently use these files. How do I release the code to the public with maximum version history but without violating copyright?

Details:

• The code is versioned under git. We will collapse it all back into one branch before release.
• There are 400 MB of audio data. Some files are free-licensed music from e.g. Jamendo, others are MP3s from our personal collections.
• No matter what approach we take, we'll always keep an immutable copy of the original repo, so as not to destroy project history.

Main question: How to handle the public release?

1. Expunge all history of the files in question from the git repository and release the altered repo. (v64 pointed out a way to do this.)
2. Alternatively, take a snapshot of the current state of the code and don't even bother having a public history of the pre-release code.

Side question: How could we have avoided this dilemma in the first place, given that sometimes private code or media is needed for the early stages of a project?