That's quite a bit of extra width for the body, which makes me wonder if that's all just shrinkage, or if it's a non-original iron.
The large mouth may cause you some issues, especially on smaller work, but you can patch that if needed.
As far as the iron size goes, you want the iron to be slightly wider than the plane body. How much is the guess - "a little" is what I'd say, like perhaps half or a third of what you're showing.
You want to be able to manipulate its use so that you can have it flush with the side of the plane or more often just slightly proud (to prevent a square cut from creeping toward the edge of the work piece, which is what will happen if the body and iron are identical in width).
I'll defer to anyone who has ever measured for an exact number, I've only used kentucky windage.
If you grind the iron back a little bit, make sure the edges have some relief so that they scrape the side of a cut and don't act to push the iron away from the cut itself.