BigJ,
As somebody pointed out, now that I look at it, it does look like the standing breech can go back just a bit (touch hole should then be perfect with pan). If the lock is screwed in, that is where it will be short of drastic action, so you may want to fill the gap in front of the plate after all. Slivers or shavings are pretty standard gap fillers and you can find the techniques discussed on this board several times, but that gap looks pretty big, so give it some thought before you choose a method and go at it. The main drawback to using slivers or shavings in my opinion is that the grain is not in line with the rest of the stock in most cases, so it is always detectable, though it may be difficult to see if done carefully. I know it is NOT your fault -- that just makes it worse for you; I guess they got tired of people complaining about undersized inlets... Take you time, and chalk it up as practice for when you do your first lock inlet and need to fill some gaps that ARE your fault
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As far as coloring the filler (whatever you choose), I would suggest that darker color is better than lighter for such things as far as blending in from the edge to the surrounding stain/finish. And, your finish may fill a small gap on its own too, so you do not have to fill the gap to the point where it could hold air; in fact, you want to allow a little room before finish, otherwise you might be scraping finish out of mortise later... The lock should be neatly inlet, but too tight can cause problems, such as removing wood when you take the lock out of a mortise that is too tight (so I've heard). And the wood can swell and stick a lock also...
Finally, set the gap problem aside for a while and come back to it -- you don't necessarily have to address it until you are ready to finish and it is pretty much completely cosmetic. When you are ready to work on just that, perhaps start a fresh thread on just that topic (if you still feel the need for additional help) to get new views, advice, and opinions. Good luck.