Drilling and cutting rack mounting bracket arms
I've got a very similar rack and avoided cutting the arms only by using one screw per arm instead of the two in your first picture (at the rack end). Crossing the arms over and using one screw per arm shortens the effective length still further. You might need to bend them a little bit they're definitely designed for that. I actually ran with only one arm on that rack on one bike, as the left arm interfered with the brake unavoidably. On my similar rack the arms are stainless steel and cutting/drilling seems like a bit too much effort (my drills are probably not sharp enough). 

I've fitted about 10 racks across 6 bikes. Nearly all have needed some sort of modification, or fittings swapped between racks.