I had replaced the shaft log (drive line bump area) prior to my rebuild so I lightly ground that area and let my glass overlap it when it needed to. You might grind it enough to get the bilge paint off and allow the new glass to stick to it, if you overlap that far.

You're coming along. Looks like you're learning how far to go with the grinding and it all looks correct to me. You're right that if you grind a little too much it won't be the end of the world and resin/glass can be used to build it back up.