Installing bulkhead for day hatch compartment

I am installing an extra bulkhead to create a day hatch compartment on my Chesapeake 17LT.  I used a piece of cardboard as a template to get the shape, so the plywood fits nicely, but I wasn't sure if i should leave it taller than the boat sides and shear clamps, flush, or below (ie, should the bulkhead influence the height of deck).  The kit bulkhead that sits just behing the seat is a bit higher than the sides.

Thanks for any input.

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