I don't know the real reason for turning the outer ring smaller either. It could be for clearance between the decklid, or at the distributor, as already mentioned, or maybe just for a nice fit onto the case, maybe machining advantages, I have no idea.
The standard Porsche diameter is 270mm. A common -modified- diameter is 260mm, this is what Ahnendorp uses for instance. CSP and I think Gerd Weiser (really not sure) have rings that go as small as 240mm, but I don't think these are genuine Porsche parts.
The Australian Sharpbuilt kit (
http://www.sharpbuilt.com.au/Sharpbuilt.htm ) utilizes the unmodified Porsche fan assembly and it comes with instructions on how to machine the case. This machining consists of decking the breather tower on the case 41mm lower and it requires a piece of aluminum to be welded into the breather tower opening, this piece comes with the kit. I got this info from various sources online, and have never seen one of these kits in person. The FAT Performance kit fits without any modifications at all I think, but it won't fit under the decklid of a Bug, if that's what you have.
For anyone that is not in a hurry: I have an original Porsche ring modified by Ahnendorp to 260mm for sale. It came straight from Porsche, went on to Ahnendorp and back, it's still in the original box, brandnew, never used. It has a dark brown/grey pickled color. I want to go with the Sharpbuilt kit because it really seems to fit very nice into the engine compartment.
Brian