Like Scooterwrench said, don't go hacking up your stock engine harness, but you can thin it out, there's a couple good step by step youtube vids on it out there. To make you gauges work, the easiest way would be to use sensor adapters with your stock sensors. Some people claim you won't have the most accurate readings because of the the adapters but you'll have something.
I'm curious as to why you bought a flywheel AND a spacer? When I first did my swap I used the TH400 that was already in the truck, and I just bought the proper flexplate (don't remember which one off hand) and I didn't need the spacer, but it's the same one as the 700r4.