Updated: Dec 25, 2019
So after living with the super tight shower for a while, I decided to go ahead and remodel. Stripped out the crazy corner sink and installed a new handle and shower head. Decided I really wanted just one handle instead of having to adjust two continually to balance the hot and cold water. Also decided to cover the back of the door with the same plastic sheeting used to patch the holes in the faucet side of the wall - this allows getting rid of the shower curtain (again gets in the way in the small space) and just use as a shower door. Works like a dream - much improved pressure/flow and a ton more room with the sink and curtain gone (as well as a lower profile handle without the faucet).
(Major components listed below)
The House of Teak Mini Mat 16"x16"x1" (Amazon $39.50)
3M 17.6-fl oz Bonding Clear Multipurpose Adhesive (Lowes $12.98)
3M 1.88-in W x 150-ft L HVAC Tape (Lowes $8.38)
I used clear silicone caulking around the door handle (also covered the screws - if still rusts, I'll replace with a moisture-safe version)
Oh, I also added the aluminum L bracket as an edge under the door (secured well with the same silicone caulk) to keep any dripping and water run off down the door from running over the lip and down to the floor.