Rear End Narrowing ?s

Intereresting question, I would look at the wear marks on the axle splines. This should give you a good idea of how much further the axles could slide into the differential. I would think 1/4 to 1/2 would work. You might try sliding the axles into third member after you have removed it and measure your total axle width after you have slid the axles in as far as you think it is safe. You are right about removing spacer with green bearings, it is not needed.