Definitely don't alter the engine thrust angles. You could make a muffler extension or possibly use a readily available one: http://www3.towerhobbies.com/cgi-bin...?&I=LXD638&P=7

Since this is your trainer and not some masterpiece that you've spent months building, I would just carve some material off the fuselage where the muffler hits. Be sure to fuel proof that area with some covering or epoxy. Sure it's a little crude but trainers tend to get bashed up anyhow.