I have pulled the gas tank. While it is out it was seems like the perfect time to put the welt back on the firewall. I looked in the Service Manual. It doesn’t seem to address the issue. I used Google to search for welt. Not much showed up.
My main question is what is the best way to spit the rivets? I use a pick to punch a hole in the welt and get the rivet to come through but splitting it seems to be troublesome. How tight does the rivet need to be?

The pic show the progress. Does it look ok?

Steve - re-lacing a '26-'27 is a pain (have done two of them). No special tool you can use like earlier firewalls, just have find something that works with what you have. It looks like you are doing a great job - I would be very happy with those results thus far.

Next question,
The hod rod looks like it will be too tight of a fit. Do I need to trim around the hood keeper?

Yes. Lacing does not go around the hood rod clip. Straight cut on each side of the clip.