Pete, welcome to the frustrating world of plumbers. I used to install those valves according to the manufacturers recommendations but now I use my own common sense and logic. I always take the larger number that they give for dimension, at a minimum...works for me.
RE: the gap...shouldn't be a gap, I've never had to caulk a gap...I don't believe that model is designed to be caulked...try to use the seal, but it might not work because the valve body/cartridge is too far back. In which case, you may have to caulk that gap.
Good luck