Since I'm doing the 12CM wastegated housing on my truck... here's what we're doing...
Instead of using the adapter bolted onto the end of the wastegated housing, I'm using the 2nd gen standard outlet. in fact, I think it's the 24V outlet. The adapter was $100 (give or take a few) and the leftover (from installing exhaust brakes) outlet for the newer trucks was free to me this time, so I ended up purchasing a takeoff (leftover from putting on 4 inch turbo-back systems) downpipe at the local muffler shop for $25, and we're patching the two systems together just beyond the bend at the bottom. It's not done yet, and won't be until probably the day after Christmas. After it's done, I'll try to get some images of it and post them.
btw, the adapter and outlet I'm talking about, are the flat plate with the clamp mount ring, or the plate with the 45 degree elbow sticking out of it, both of which bolt to the exhaust housing on the turbo.
It looks like cleaner flow than the big "Z" bend in the stock downpipe. If you're going with the regular downpipe, however, I believe you remove 1. 25 inches. A little more should not hurt.
BTW, just where in S. E Washington are you? Walla Walla? Clarkston? Dayton? Colfax?