I think you've identified the problem Dan, when you mentioned the cowl flaps would overlap the fuselage if closed. I think perhaps the cowling is too short at the rear end. See if you can measure the cowling length, from the forward joint of the cowl flaps to the front of the cowling, and check against your scale plans. It only looks to be a couple of millimetres, but enough to be noticeable. If you can add an internal ring at the rear, under the cowl flaps, that should bring the flaps into line, and stop the cranckcase protruding. If this is not possible, then I'd suggest you leave it and accept it. Should be possible though. I'll include a piece of thin aluminium sheet (litho plate) which you can use to cut and form a narrow ring. If the cowling is extended, it won't affect the engine or exhausts, and would look right.
