Trying to get lower...
Fender clearance is the main issue. More specifically, the wiring there under the fender. Move the wiring and you can more safely let the tire scuff the fender at full suspension travel.
A smaller diameter wheel with a smaller diameter tire will let you drop the rear end lower to the ground. With a spoked wheel, you're only limited by your creativity in lacing a smaller rim on. Well, you're kinda limited by tire and rim strength, but I've no idea what the load capacities are for say 12-14" tires. Though if you use a car tire, the sky is your limit. There are still 13" tires out there that are strong enough, and perhaps even 10" trailer tires.
As for moving the fender up, you can. More easily with a solo seat, and especially with a cop solo seat. You can even get clever and hinge the fender at the front, and connect it to the lower shock mount so it rises and falls with the wheel. That would let you run it close to the tire at all times. You'll probably want to mount the rear lights onto some sort of frame mount, so they don't bob and flap with the fender motion.
The easiest way to get the lowest rear end with the stock fender for the lowest price would be to hard tail the rear with rods instead of shocks. You can make some crude ones with thick walled conduit just to see if you can handle the ride quality. Just hammer the ends, drill the holes and mount them. Paint them black and they'll blend in.
Just a few ideas on some ways to get your desired results.








