Jim,
Your fuselage build looks great so far. I've been a little stalled on my build do to work however, tomorrow I plan on flying in the morning and then continuing my build in the afternoon for a few hours anyway
For my engine placement I plan on doing some experimenting with motor position once I have my fuselage started. I'm no expert by any means but I don't think an 1/8 inch would be that significant.
Happy building and once again your build is coming along nicely.
Regards
Mike