I have 1" spacing between tires on my 235/80 tires. This is at 55 PSI and unloaded. Going to a larger size will reduce that to a little over 1/4" unloaded. Seems like that spacing would be perfect for catching rocks and grinding them into the sidewalls.
There is a dually that roams around our town that has monster tires that stick out around 5" past the wheel wells. I assume he has special wheels or spacers.
The 1.2" taller calculates out to 4%. That is 4% less acceleration and braking performance.