KDOG
As everyone says you can do what ever you want. I like to cover the frame. Some folks don't.
In my opinion narrowing the frame, and bolting the Plywood to the sides stiffens it by using the plywood as a Box Beam. This is a moot issue though because bolting on top of the frame does the same thing.
As far as head room, I make all my trailers 42" tall, not 48". It makes them look longer. I think looking longer on a small trailer is a good thing. And at 5'7" I don't need a lot of head room.
You should really try to get down to TearJerkers Gathering at Elk Neck next month. Lots of builders, restorers, store bought trailers and Real ones from the 40-50's.
The details;
http://tinyurl.com/2o5fec
I built about 5 Teardrops before I ever saw a real one. Within a very short time I saw some major mistakes I had made, and never made them again.
Seeing the real deal is very enlightening.
Happy Trails
Len