OK Al, this is giving me some serious heartburn. I think you're right, but I never thought of it until now. I am putting my 67 interior together from scratch. If I tuck the carpet under the insulation, I immediately create 3 problems:
1) The speedo cable comes through the firewall just below the the insulation just to the RIGHT of the tranny tunnel (4spd car). I did not put it behind the insulation because it did not appear to be long enough to do so. If I tuck the carpet, I will have to cut a 2-3 inch slit in the carpet to deal with the cable.
2) Does the dimmer floor switch wiring go behind the firewall insulation? If not, a lot of it will show when I tuck the carpet.
If it does go behind, I'll have to pull the fuse box again in order to tuck it.
3) The jute padding on the insulation has separated from the vinyl under the steering column. It hangs a little lower than the vinyl. This will look crappy when I tuck the carpet.
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