I'm running 33's on the original 17 rims, I've got KM2's and when I priced them in early 2014 the difference between 17 & 16 was only about $200 for five tyres. Checked a couple of dealers and this was at JAX tyres, not sure if they are in WA.
No issues with front mud flaps, I did a minimal alteration to the inside edge (I can post up a pic if the helps). Also no issues with power.
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