Very nice, Gabe. Actually, you CAN'T TOUCH the frame if you want to keep it Class 7 legal. You can add material, but you can't remove material, notch it or relocate it like Gabe's. That's why a legal truck with 27" of travel and 35's sits just a little higher than 1/2" over stock. That's also why so many Rangers buck so much. I'd like to notch mine or ditch it completely (especially for short-course), but then I'd have to run class 1!
Class 7 requires complete and un-modified frame rails... but this is a prerunner, so.
It was an easy decision on my behalf... $$ did have alot to do with it, indeed, but after talking with Nestor, and giving him more input on what I wanted the truck to do, it was a logical decision to simply pie and plate the frame rails for 27 inches of travel... plenty for me, mind you.
My cell would have fit between the rails if I kept them back there, but Nestor wanted to do something different, so I turned him loose on it.
The op question is quite tricky. You want enough shock compression at ride height so that your shocks have enough time to catch the car when you hit rocks, or a bump et so your not smashing the bump stops all the time. So technically it comes down to how your shocks are mounted compared to desired ride height. With the stock rear rail its a comprise. You can have it overly high and enough shock travel or at a nice height with not enough travel. From memory we were aiming for 7 - 8 inches of exposed shock shaft. At ride height.