Any reason for the style of rear dropouts

If you have to file your frame's dropouts down, it's probably something very old designed for a Sturmey-Archer hub. If the frame's a lightweight, it's a pity to do this, IMO.
But if you are going to file do the bottom of the dropout, otherwise you might have alignment issues.

I've done it on my old Hercules which had the same problem - It's pretty easy. I used a good 2nd cut file. Just take your time to make sure you file both sides evenly. Probably took about 20 mins. I thought about filing flats on the hub axles but decided that doing the dropouts seemed like the better bet in the long run for swapping wheels etc.

thanks guys for the tips!