Kona,
Usually, about 10/16" (or 5/8", if you prefer) is just about the right space for leaving the wrap recessed for the head. I've had drums wrapped like this and it works perfectly. The head covers the bare shell, but no wrap material interferes with the head. It depends on the head of course. I recommend putting a head with a hoop on the shell, then tracing around the collar of the head with a pencil to see where to "stop" the wrap. Again, I've found that it's usually about 10/16" or so from the bearing edge.
Also, for your 50's Grestch drums (and cocktail drum), have you tried Aquarian "American Vintage" heads? The vintage Aquarian heads come in two styles: "Modern Vintage" (For drums from the 60's to present) and "American Vintage" for drums older than the 1960's (not 100% sure on the exact dates, but Aquarian's website will tell you).
Anyway, the "American Vintage" models are oversized to be able to fit on older shells like yours.
V