Thanks Caveman, Andrew had sugested the hammer solution at one point too, but i guess the pics dont really do it justice, in the last one the end of the shaft actually sits about 1.5-2" outside the end of the column, and an 1" or so below.
Ive come to the conclusion after trying several options for mounting the column (ie 1" of spacers, a misc bracket I had lying around) that the Pacesetter headers just dont work with 1" of body lift.
Right now the two real options im considering are, finding oem 304 manifolds and ditching the pacesetter system, or getting that first tube reworked and out enough for the shaft to run through it.
If I cant source the manifolds, or if getting the header hacked up wont work, ill look deeper into the pillow mount. I recently got a borgeson shaft and they have a diagram and some info on going that route, perhaps ill ping them tomorrow to see what's involved.
Thanks for all the input guys!