TC -
The easiest way to cut the notch is with a router. It is a two-step operation. First cut the notch with a rabbet bit.
(I cut a 1/4" offset. My hurricane hinge from Grant does not offset in height. This would be the same situation as the living hinge that you're using. Under neath the hatch plywood I added aluminum and I also added aluminum cap trim on my galley sidewalls. This left about 1/8" clearance for weatherstripping.)
After the notch is cut, then you come back with a pattern or template bit - the bearing rides in the notch you just cut - and remove the rest of the material.
Sounds scary, but it was really pretty easy to do.
Take care, Tom