That actually looks pretty good to me, although I am nowhere near an expert! From what I understand, the wheel well will be lower down the tires and even over the top part of the wheels when the axle needs replacing (when the trailer is sitting on the ground, not lifted). Hopefully someone with more experience will chime in here in a bit.
And I would actually replace axles *before* I made it livable, if it needed them, or at least do the livable mods and then the axles before I took it anywhere. If the axles need replacing, they can beat the heck out of the inside of your trailer (rivets popping, cabinets/walls separating, etc.) due to the roughness of the ride.
Congrats on your new baby, and thanks for the pics! We love pictures here.