Don- you can trim the edge of the stern PE simply by scissors. Normal household large scissors will do.
The Eduard PE is like you said paper thin, and you can cut it just like paper.
However id strongly advise you to glue the PE to the deck first, and then trim it, as this way you will avoid any mistakes.
Do not bother with drilling the styrene, and using rods as the guides- even if it works, you are making unnecessary effort, and the end result will not be any better.
Do use thick CA for the job, as it allows for some adjustments, before it sets.
You can sand this piece easily by placing the 1500 grit sandpaper on flat surface- make sure theres no kinks, and place the part over the top. Now smoothly rub the part over the paper with delicate pressure.