That's the shortest I can get it, otherwise, like said, the jockey interferes with the sprocket. When I had the 36/17 combo on there was about 2mm clearance! I'm going to revisit the whole tensioner method asap - want did of the butchered mech though it does do its job!
A butchered mech should be able to operate as a push-up if the chosen sprocket size would have been acceptable at the equivalent position in a cassette.
Can you not lose a couple of links from the chain? Not much engagement on that sprocket.