Hey cutthroat,
Sorry to hear about the tire contact problem. I have a few ideas for you before you scrap the Vanilla.
1. A lower profile rear tire will help of course. Looks like yours has a very high profile. What tire is that anyway?
2. Nylon, plastic or rubber washers on the shaft of the shock. This will reduce the stroke length of the shock and stop the tire contact. You will not get the full 4.7" of travel but 4.5" or 4.4" wouldn't be bad. There was a thread on this a while back.
You may want to try a few different combinations. As I mentioned before I sold you the shock, I had no pblems with tire contact on my 2002 XCE but perhaps I never really used the full stroke and bottomed out. Or my rear tire may have been smaller than yours.
No doubt we are pushing the design limits here and a little expermimentation may be warranted. Other than the contact problem how did you like the feel of the coil?
Good luck, Bob