John,
You can trim the flanges back, just try not to cut into the actual seam where the inner and outer skins are bonded together (if so equipped).
As far as prep work goes... how old is the hood? I ask this because, if it is fairly new, it will still be gassing out and curing from the construction process. I always set a 'glass hood outside in the weather for a week or so to let it "cook". Sunshine, hot/cold cycles, rain, whatever... This will help the hood stablize and should prevent the shrinkage problem you mentioned and will bring out any "imperfections" that may exist before you get it painted...
I did this with the Unlimited Products hood on my truck and I've had no problems with it...