I think you're on the right track.

I looked at a bunch of pictures of real-life service modules, and there's hardly any gap between the white rectangles and the front end of the service module.

So Excalibur seems to have included some "slack." It's an awful lot of it! Makes me feel better about the job I did. With the section above the dotted line removed, my model's service module is maybe 3/32" too short. So I'll need to trim a little off the bottom of the decal as well.

The photos also suggested why the narrow white rectangles (one visioble in the photo, below the American flag). There's a half-oval antenna in roughly one of these locations. Similar to the "Scimitar antenna" on the Command Module. I will look into cutting out two more and fitting them to the SM after the decal is in place.

I also need to paint the thrusters silver rather than white! Or two tones of metallic.

It's funny, going to these lenghts after the awful mess I made of the model as a whole. Perhaps if the SM / CM look good, it will draw people's eye's away from how I glued the wraps on wrong (45 years ago!) and my goofy hand-paint-job.

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NAR #27085 - Oregon Rocketry - SAM