You really want to get the rudder as close to the fin as possible to eliminate any gap on the hinge line. However you also need to bevel the leading edge of rudder (and the other control surfaces) anywhere from 30 to 45 degrees. This provides the room needed for the control surface to move.

This is normally done before the surface is covered and is usually done with a sanding block held at the correct angle on the leading edge of the surface. Ideally you mark the centerline (the little cheap plastic hinge line marking tools work well for this - just mark the whole leading edge instead of just where the hinge will go) and then sand at a 30 to 45 degree angle until you reach the center line.

Some kits such as some of the Goldberg kits, also supply a handy little plywood jigs with the proper angles for the bevels. You glue the three parts of the jig together, attach sandpaper to the face of it and then run it along the leading edge of the surface. It gives a very accurate angle and a very straight edge and the little jigs are worth throwing in the tool box for other models.

In your case you will need to remove the covering first. You can either recovere the whole rudder or you can trim the covering off to about 1/4" aft of the leading edge, sand the proper angle and then add a single strip of covering over the leading edge. You will want a 1/4 inch overlap on each side so the strip will need to be an inch or so wide. If the edges are cut straight it will not be that noticeable.

On the other hand, you normally do not need full rudder travel and an inch of movement (measured at the trailing edge) is usually more than enough. Your aircraft may call for less travel as well. I have seen rudder travels specified as low as 3/8 of an inch on some aircraft so your problem may not really be a problem at all.