So on the subject of flares, what i draw from this was the factory intention, was to have wide arches that were cut for race cars. They didn't do it for cost reasons, as were most styling decisions on the zed. At the risk of being corrected by HS30-H, I saw a youtube interview with one of the original Japanese designers of the z, saying he wanted headlight covers and full height grill as standard. So there is supporting evidence that this could be the reason for not cutting the guards. Also they would have to fit super wide wheels and tyres from the factory, further cost and all things you would change if you were racing it anyway.
So from that we can deduce that cutting guards with flares is just finishing the factory's job, if you have a g-nose
I think the video you saw was Matsuo san explaining that he originally wanted a slatted grille that filled the whole 'hole' in the front of the short-nosed Z body. The headlamp covers were also part of the original styling of the car but were used as an extra-cost showroom option in the end.
Nissan would not have needed to make the cars with wide arches, as the process of homologation allowed them to document and legalise the parts they wanted to use for competition. That meant they could use rivet-on overfenders and cut the sheetmetal underneath them if necessary. After homologating the minimum-sized overfenders for the 432-R and then later the 240ZG, they were able to use a percentage slightly wider than that in competition. When they wanted to go wider still, they homologated what later became known as the 'Type A' and 'Type B' "Full Works" overfenders, and - once again - used a percentage sightly wider on their own Works cars.
So there was no need for them to make wide-arched cars to sell to the general public when the process of homologation via JAF and the FIA made it easier for them to do it with rivet-on overfenders.
People sometimes ask me why the 240ZG was sold with (normal) skinny wheels and hubcaps. The answer is that the 240ZG was only built and sold to the general public in a certain quantity that would legalise the homologation of the parts that they wanted to use for racing, and - just as importantly - the evolutions that followed from them. The 240ZG wasn't built as a 'race' car, it was simply a homologation exercise.