First question: Was this panel hit in the rear? Is there any tell tail signs of body repair? I have not seen any adjustments on my Suburbans that have barn doors. Have you loosened the bolts that hold the door and the attach to the pillar to see if you can get the 1/8" you need?
If there has been damage, is there a way to jack the body downward 1/8" -1/4"? This might be a good question for Ray Stanley (metalman) My thought on enlarging the hinge holes would be, could they come out of adjustment on a bumpy ride?