I have a very similar setup (SKS Chromoplastics), and can say the following:
- I installed a suspension forks and then the former length of the metal wires bacame too long for the setup. I BENT them in a sharp turn to run parallel to the mudguard (of course it can be bent in any suitable direction, just NOT point straight back like yours). Haven't had any issue yet. I DIDN'T CUT them because there is always a possibility to use the mudguard in other bike with a larger wheel (I use 26in), or to put the rigid fork back. If that happens, I'd just unbend the wires again.
- Rotating the mudguard backwards is always good. The more backwards, the less water flying below you. If you have clamped the little "L" shaped metal plate in front of the fork, you can change it to the back part of the fork. There are only two relative caveats:
- The front part of the mudguard might become too short, and some drops might start getting on your face at high speeds on rainy or wet days;
- If you go down some step or curb, you should take extra care not to hit the rear part of the fender against the obstacle.
- Any mudguard like yours is suitable to the bike. Your main problem, as DanielRHicks correctly pointed, is that you should have got the wires short (either by cutting or by bending). Even then, it is acceptable to have a minimal toe overlap. Since you ride platform pedals, I would suggest you to watch yourself if you are pedalling with the foot too much forward ("arch pedaling"). Perhaps you might like to use straps or clipless pedals.
About using a flap, I am ABSOLUTELY CONVINCED that it is very very welcome and extremely useful. Some designs are more flexible, and that work better, but yours is fine, specially if you manage to get the whole mudguard lower than this. I use to say that I'd rather ride without all the rest of the mudguard than without the flap, because it is the actual responsible for a clean and long-lasting chain, and not-so-wet feet.
Hope this helps