Your job will be eased if you trim off a lot of the excess metal on the rear edge of the hood before you start hammering the new flange. I'd leave a minimum of 1/16-inch extra metal, but where the current gap is 0, and you'll be making a 3/16-inch gap, you can safely cut 1/8-inch off the flange, which will make hammering the new flange easier. Once you have the new flange positioned to your liking, you can sand the height of the flange to make it uniform from side to side, and reattach the rear brace.

Let me know how well this works for you, or write again if you have any further questions.