Moving the engine vertically will have very little effect, in fact no noticeable effect at all on most models.

Moveing the engine to the side on most models won't make much difference, but might cause some odd rudder trim issues. Some models will be affected more than others though. On a tail dragger that is prone to ground looping (like a cub), it could make take off and landing really exciting. It will look funny, and will get "attention" at the field if you fly with other guys though.

Personally though, I wouldn't move the engine side-to-side, I'd do something else.

You could go buy a pitts-style muffler, which is meant for this kind of thing.

You could get an exhaust extension. This is a bit of metal that fits between the stock muffler and the engine to move the muffler farther from the engine specifically to handle this kind of problem.

You could also cut clearance in the firewall, and make the necessary structure changes to seal up that area. That depends a lot on how the plane is built and how much trouble you want to go through.