I love how it's shaping up Scott. The flares will work but you've sure got some work ahead of you. Cut away the body under the flares. I helped a friend build a jeep charokee once and we did basically the same thing. To clear the tires he moved the fender flares up, screwed them to the body and then cut away the body panels (or beat them in) under the flares to make room. Perhaps use aves apoxy sculpt to close those gaps. I like using that on wide gaps instead of styrene. It's quicker to sand since it can be shaped before hand and makes for a strong filler.
As far as the exoskeleton size... that's up to you. Maybe use the larger tube for main bars and the smaller for cross bars and gussets?