That's an interesting choice, and yes, you should easily be able to fit the muffler in the cowl with that engine. Those J-Tec mufflers sure are pricey though, aren't they?
Let us know how the DLE20 works out for you. I'm curious as to whether or not the plane is underpowered with that engine. My plane was barely flyable on the 26cc Aerovate which is why I upgraded to the DLE30. However, my plane is a bit heavier than average due to the full cockpit and some other scale accessories. It weighs in at 17 lbs dry.