cutting the mud flap is probably one of the easier thing you will do.
I purchased some flush mount turnsignals and cut off the flap and the signals and mounted the flushmounts on either side of the brake lights, by drilling a small hole in the plastic to run the wires directly behind the flushmounts and wha laa!
As far as the mud flap, a dremel will work wonders here, and you basically cut it to your own desires. Then when you are done with the cut, you can use a razor blade to get rid of all the excess melted plastic caused by the dremel, and finally run over the edges with a find grit sand paper and it will look as good as it can get.
Kinda vague, but if you take a look at the fender on the bike, you can pretty much see what you gotta do.
OH YEA.. after the fender was removed, i took off the hump, and checked for clearance, then i drilled to small holes through the tray just under the brake light and using 2 L shaped brackets i mountd my plate, and the stock light still lights er up.
Good luck man
scott