Had this problem with the rear wheel arch (on a 1600).
This was the final panel welded in
Unfortunately I didn't take many in progress photos. So to try and show you what I did, I went out tonight and recreated it with cardboard. Please note, I didn't use cardboard as a template, the cardboard you see is just representative of what I did in metal.
Started by making a quick form out of 1/4" rod which matched the upper curve of the wheel arch to get a bit of a curve started in the metal.
I then did a very quick bend over the form, I only got a very small shape into the metal, but did concentrate on making larger dints where you see the little black dots. This was so that I could clamp it closely to the wheel arch and use the wheel arch as a hammer form.
I then clamped it to the flare like this and started working on folding the bottom flange under. I did this with lots of quick light taps on the v marks. I also didn't fold it all the way under, probably got to about a 45deg section to start with (as you fold the flange under it wants to buckle away from the wheel arch).
Then I worked on the edge of the wheel arch to get the metal back towards the wheel arch (had only come out a couple of mm).
Then lots of little taps on the top of the wheel arch, and all over. I basically went back and forward, top and bottom and on the wheel arch all over the place. Using the wheel arch as a hammer form worked great.
I then cut it out using a large radius (thanks for the tip Ledge, helped minimise distortion) and welded it in.
More photos can be found on the build thread http://the510realm.com/viewtopic.php?f=3&t=24424&start=15#p209195
Apologies if there are too many photos.
I found that a light (200gram) ball pein hammer was best for this job. Used the ball part for the top of the wheel arch and the flat for the bottom and front of the flange. The ball pein came in handy as even the flat section has a bit of a radius around the edges so it didn't leave any hard marks.
I also started this panel trying to use a stretcher, but since mine only stretches the first inch of the metal I couldn't get it to stretch that large radius of the wheel arch.