I had a similar problem with my Gripen with only a small gap between the exhaust pipe and the fiberglass nozzle. I also lined the inside of the nozzle with reflective tape. It looks great inside in low/medium light conditions from the side, but in the bright mid-day sun, you really can only see it well from directly behind. As such, I'm making a new fibreglass nozzle that has a bigger opening.

Your F-16 has a much bigger gap (not to mention the extra LED's), so you'll probably be pleased with the results.

Regards,

Jim