There are probably many things you could do. Recessing the plate 1/8 to 3/16" might help as you say. If you don't have enough height for the retract unit, you could then shim between the retract unit and the plate to get back to your needed height.

You could also "chamfer" the LE of the flex plate, so it gets closer to being parallel with the foam LE. You could also move the fwd outboard screw (that holds the plate to the spar) inboard 1/2" or so.

And, if you could move the fwd spar aft some, that might allow you to shorten the flex plate.

Good Luck! [8D]