Had this been posted in a discussion section and not a FAQ it would have been seen sooner.
I've moved this to it's own thread in the general discussion section.
In answer to your question, no, removing the rear timing belt plate will not allow the seals to walk, BUT if they start leaking or the union of the head and block starts leaking or other debris is introduced you'll trash your timing belt. You'll also need to tie the wiring harness down. Running without the timing belt cover is foolish as it's VERY cheap insurance (this goes for the front as well, if you want to show off the gears buy a clear cover).
The way most people deal with the hitting issue you're experiencing is by tightening down the the set screws in the gears (with the gears off) and then using a dremel to grind off the excess.
