Am I right in assuming the slight pad overlap is no big deal?

You are wrong ...
the part of the pads that are not being worn will touch each other and you won't be able to brake...

 

^^^ x10. You'll loose brakes after not to long. Anytime you change rotor size you MUST change adapters as well. Its one thing if pads run a mm or 2 low but never higher than the outside of the rotor.

 

I figured there be some lippage which I would knock off with file occasionally.

No other reasons then that, right?

Anyone know if they even sell Avid adapters in such small increments?

EDIT: Just realized adapters are not really specific to brand.

Thanks for help!

 

Anyone know if they even sell Avid adapters in such small increments?

They do, but as you have realized you don't need to use Avid adapters, 185mm is a old Avid size that isn't made anymore, Avid now uses the 180mm size like most other brands.

For 180mm rotors &
160mm Post Mounts use the '20mm Post' adapter
140mm Post Mounts use the '40mm Post' adapter
160mm IS mounts use the '20mm IS' adapter
140mm IS mounts use the '40mm IS' adapter

https://www.sram.com/avid/products/cps-mounting-brackets

Forks usually have either 160mm Post Mounts or 160mm IS mounts
Frames usually have either 160mm Post Mounts or 140mm IS mounts
*There can be variations of the above.

 

Thanks Cobba, much appreciated.

I now have an Avid IS40 on the way for 180mm rear/FSR. Hope I'm on the right track.