It looks like 5/8 T&G, so no problem with strength lol.
I would cut the walls flush as you say, and to make it simple, attach a 2x4 on the edge to give you 1-1/2" overhang for the side, or use 2 to make it 3" if you think you need more, but 1 1/2" is probably ok, flash it.
On the bottom....If the 2x4 can be taken off, I would take it off and cut the plywood off that may be in the way, lets say 4-5" along the edge, then try to slide some 2x4 pieces up to scab on the side of the existing rafters and let them hang over
10 1/2", then put a 2x4 back on and then it would be a 12" overhang. Soffit underneath.
For the corners get some smart board, 5/4 is 1" thick, 4/4 will work too, butt your siding into it, for hardi caulk where you butt into, or if its vinyl then run your J trim up the corner and run your siding into it as normal.
