Engineering in that sense is more if you're rebuilding a car from scratch -- say, doing up an old model for legal street use and putting much bigger wheels on that it originally had.

The safety issue isn't so much other people's fingers and toes, it's the fact that the guard won't allow the suspension to bring the wheel right up: that's going to affect the handling of the whole car and possibly peel the tyre in an extreme case.

Since its illegal throughout all of Australia, you're just asking for trouble if you do so and there's no good reason for having your tyres stick out past your guards in my opinion...