Or do I keep the fiberglass about 1/2" away from all these moving parts by careful trimming of the cloth prior to application? That's not what the plans show, but it seems like the only safe course of action to me!
You are right one. Cut 3/4" holes in the cloth in the proper position prior to application. I then glass the area very carefully aroung the opening leaving lots of "unglassed" area which is not seen or needed for strength. I do it with a single continous piece with the "seam" on the hidden side.
I don't use the wax thing but do, but when you are worried about epoxy sticking to something important like the torque rods, I use a light coating of vasoline applierd with a Q tip.