Thanks for the feedback guys. Jeffy and Bounty Hunter, now that you mention it, when I installed the exhaust system I pushed the pipe as far on to the backside of the muffler as possible. I should be able to gain something there by backing off the clamp. I don't think I can gain much on the front side of the muffler as it bolts up right to the catalytic convertor. There are 2 studs on the muffler flange that fit through a flange on the cat. When you tighten the two nuts, it sucks the muffler up tight against the cat.
Jeepheap - I tried the bfh route but the hanger starts to bend up towards the bottom of the frame rail which rotates the exhaust pipe into shock even more. If I can't get any clearance by moving the exhaust pipe back off the muffler, I may have to try some creative work with the bfh and some 2x4's to get the hanger to bend the right way.
Nuxt option is to build a new hanger to mount to the frame. I have a friend who owns a machine shop, so he can fab something up for me as long as I give him a sketch. I just need to pay for materials which shouldn't be too much.
Last option is to put the end piece directly off the muffler like Liljeepz. Hey Liljeepz, do you have any problems with exhaust fumes, especially at idle at a stoplight or on the trail?