To lower the rear, you'll have to remove the spring plates from the torsion bars and rotate them in relation to each other-I think Pelican's tech page has the procedure to get it right (or at least real close) the first time. 7" inch rims should fit fine in the rear-they'll come right to the edge of teh wheel well with factory backspacing. Be careful of the inside sidewall of the tires-they'll be pretty close to the trailing arm/spring plate attaching bolts, and you may need wheel spacers.
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Clay Mcguill
www.geocities.com/the912guy