I had the same issue with a .46 AX on a NextStar. If I remember correctly, I just slid the engine as far forward as possible and let it go. I don't recall any issue with muffler head damaging the covering, and it had maybe 1/64 - 1/32 between the muffler and the covering. I had more of an issue of the trim and windows peeling off due to the cheap covering Hobbico uses.

Hogflyer