Hi, the prop should be shrouded by the Kort so that there is no water thrown off the tips of the blades.
If the Kort is also a rudder then the prop should be under the rotating shaft of the Kort nozzle.
The clearance is as minimal as you can make it.
Originally the Mississippi towboats had cut off blades that were a good fit, however experience showed that the not infrequent logs in the river could jam up the prop in the Kort. They reverted to conventional round tipped blades and these could often chew through the logs.
Regards
Roy