I've done it, on this very tender (and a couple of others). I hate the high-water look; some say that it is needed for tight radius curves/truck swing, but many a PW Lionel tender sat nice and low on the trucks. My old 2055 tender sits down realistically. I don't do much RK-size stuff, but this flaw has kept me off a few project locos.
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So - there was plenty of room for the PS2 electronics after the shell was "chopped and channeled". Raising the trucks (lowering the body) can sometimes be accomplished by turning the frame upside down, but this just depends on how the frame is formed. Case by case.
I shortened the mounting post at each corner of the shell (measure more than once). Seems I had to drill out the posts a bit and re-tap some threads. Not as spooky as it sounds. Be careful and treat it as a learning experience - and a good excuse to buy a Moto-Tool. Now you can start abusing all sorts of equipment.
Anyway, I also needed to cut (Moto-Tool, again) out a notch at the front bottom of the tender shell, or on the steel frame (I forget - you'll see which) so that the tether could continue to get out of the tender.
Be patient. Don't get filings in your electronics - in fact, remove them (usually 2 screws) during the process.
It did look better.