Moving the tire/wheel combo inside the fender so that you don't have contact with the wheel well opening will obviously provide much more wheel travel without contacting the fender. And as presented in this thread, there are different approaches.
But independent of which method you would chose, the comment that strikes me is your description of hitting a bump and the rear sinking down. That sounds to me like your spring rate and shock absorber valving are way out of whack. At the least is sounds like you need some more compression control in the shocks.
You can do all sorts of cool things to move the wheel/tire combo inboard, but if you don't address the spring rates and valving, your rear suspension will bounce, sink, jounce and sag exactly the same as it does now.
Rates and valving seem to be a bit of a "black art" to many, but they are crucial to a good ride. When you take a ride in a vehicle that handles and feels great - your feeling the spring rate and shock valving - not the geometry (leaf, coil, four-link, trailing arm).
Chevy55, since you are in AZ, you have access to some shops that work with spring rates and valvings - a common adjustment in Off-road racing. Most don't know what they are doing, but some do. Consulting with one of them might be time well spent in helping you with your new rear suspension project.
If you want some shop suggestions, I will be happy to impart my wisdumb upon you.
-dch
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