How much of this do I need to cut. I feel like I'm close but I know there are some internals I need to avoid.

 

Problem solved.....

 

So I tried to use 1" spacers, but they were a hair to wide, so I cut the outside down with a Dremel. It worked without having to shave the latch, but I had pre drilled for #8 screws and my local Home Depot only had 1 1/2" lengths, and they were too short. If you want to do this, without shaving the latch, you can use 8.5" spacers, just find screws at are 2" long. Here are some pics.