I agree with that Andy.
Note that the 'E' certainly overlaps the roundel on the nearest aircraft, and on the center aircraft, which appears to be Bader's LE-D. I don't think I've ever seen a code letter intruding into the 'Sky' band on either Hurricanes or Spitfires, although partial obliteration of the serial number, by the band, was quite common, where the 'missing' digits weren't re-painted. With the space available, the 'L' would be very close to the front edge of the band, but would, I think, just fit without intruding into the band.
I'm fairly sure I have at least one pic in at least one book, of a later formation shot, with the 'Sky' band, taken from the starboard side, and possibly a ground shot, and/or some video footage - I'm still looking through my references as time permits. But personally, I'd go along with your decision, and hav the codes as shown in the pic, with the band close up to the 'L'.