I have this plane - and it was one nice ARF to assemble... I didn't remove the lip on the engine compartment (and it's only optional, just makes installation a little easier). To do it, just take a dremel sander (or a knife) and trim the 'lip' so it's even with the fuse sides. Use a sanding block to make it flush with the vertical fuselage sides.

I used an OS 52 in mine and could install it pretty easily (also with a fueling valve, mounted in the location shown in the booklet).

Good luck!