Yea that part is the axle trust me you don't want that to rip open it will sling grease everywhere. Although you can get the bottom of the coilover very close to the boot. On my car I have about 10mm of clearance and no problems. On Bc's you can adjust height 2 ways one way being by the collars and the other by messing with the spring preload but the latter isn't recommend as people say it might reduce the life of the coil-over. I know plenty of people that screw with preload to get real low and they never had any problems. Although the ride is a little bit bouncier.