Basically what i need to know is, about how much space between the rim and trailing arm (rear wheel) is needed so they will not touch. I have about 3/8" to a 1/2" space. Looks sketchy, but i dont know how much travel the rear wheel will have, if any???

 

1/2 " will be plenty, under 3/8" I'd try it but keep an eye on the arm to see if it's getting polished by the wheel in the turns.