My fastback had terrible end cap alignment. I made the decision to leave it as-factory and just align as best as possible. Thickness of the side seals can help reposition a little.

I think I will just do what MS stated and adjust trunk lid and end caps as close as possible and go with it. Some  65-66 Mustangs I see that have been rebuilt have poor panel alignment. I am working on my garage rebuild to at least be presentable. Or should I say acceptable for me.

always thanks for the feed back, it does help.

Hmm whats the gap look like against the trunk filler panel?

Also could be fitting bad because the PO didn't properly fit the quarter before being installed? If you weld and your not past body stage what about drilling some spot welds slicing the quarter and re adjusting the rear. Sometimes that is needed to make some quarters fit. The way to tell if you have a stock quarter is the brazing spots that the factory made. Same thing with the doors they are brazed in a few spots. So if you dont see brazing then you dont have an original quarter.

Until recently the only way I had read to correct the fit was done by two different professional builders that said to build a mountain ridge of JB Weld at the front where it connects to the quarter panel, shape it and fill in behind it with bondo. The bondo was of course is subject to cracking because the extensions tend to twist when tightened.
Then I came upon a build on VMF by Klutch titled; 1970 Mach 1 H-Code Build. He said his quarter extension had 1/2" of bondo on it, and he was going to see if he could tweak the pot metal, and maybe get away with just a little bondo. He didn’t elaborate exactly how he did it, so I asked, and here is his response:
Yeah, as is typical, my quarter extensions didn't line up with my quarter panels very well. What I did was to gently clamp each extension into a vice with wooden blocks. Then I very carefully bent the metal in the direction I wanted it to go. I just did it instinctively. There was a big pucker factor because I was the afraid the pot metal would crack or even break. Surprisingly, that didn't happen. It took many attempts at bending and test fitting each quarter extension until, finally, I got it to where it lined up quite nicely. It was one of those situations where persistence paid off.
If you want to try this, I can't guarantee your quarter extensions won't crack or break, but it sure worked well for me. Good luck and have fun!

I know this is old post but I was wondering are the quarter end caps 1965 or 1966? Or replacement? I noticed that on a 1965 mustang that I was working on in a Restoration Shop replacing trunk sides quarters and outer wheel house. I'd noticed that the caps fit horrible to the new quarters. My Boss after being in the business for a while had purchased quite a stock pile of parts. I looked in our extra 1965-66 body parts. I found a matching set of 1966 coupe quarter extensions and another set of 65 coupe extensions. The extra 65 pair fit equally as poor. The 1966 caps however fit much nicer almost perfectly I was amazed that the others were so far off compared to the others. I mean the 66 caps halving the gasket and flatter mounting surface maybe the way to go.