Thanks friends! So, I worked on the engine covers more. I used the hobby files for a lot of sanding and they got really thinner but I think this is as close as one gets. I still think I might just leave one or both of them open. If I build this ICM kit again (which I might as I have another one in my stash for Stepanenko's Yak-9T), I will simply skip building the engine and cut the rips for easy fit of the covers. I think they look OK for now.
Then, I added the exhaust pipes to the engine. They need to be attached to the engine and aligned before the fuselage is put together.
Next, the pilot's seat, the IP and the back panel where the radio is located were glued to the right fuselage.
Finally, I put the engine in and tried to align it as best as I can. The exhaust pipes need to have a 90-degrees angle.
At the end surprisingly, both sides of the fuselage came together without much problems. I was concerned that the engine, the pilot's seat, or the instrument panel etc. might cause problems. I think the only engineering fiasco with this kit, other than some inaccuracies, is the engine covers. However, just like many other old ICM kits, it does need a lot of help to have a good fit.