First off Jack, you need to share your "cheap" source of BFG KM2's, I own a set on my 80 and love them.
Can you put them on? Sure
Will they rub? Sure
Will doing the "body mount chop" help reduce rubbing? Yes
Will doing it remove the rubbing? Depends...on how the chop was done but they will probably still rub when reversing, turning hard one way or another and going up/down a driveway "ramp". When you get it aligned, you can ask the tech to push the caster as far forward as they can to help give some clearance to the BMC. Refer to Bmthiker's rig, he is running those tires but not on stock wheels.
The issue is the extra width of the 12.50 tire. I ran a 35 x 10.5 tire without issues. The problem is finding a 35 x 10.50 x 16, the best option IMHO (SS SSR tire) is currently unavailable with no date expected 6 months out.
My best advise is what was advise above, agreeing the a good 33" tire is the best option. They won't impact the drivetrain as severely as the 35's do, are much cheaper, available in the BFG KM2 (255/85/16), won't suck as much out of the MPG's as 35's do. I ran them before I re-geared mine and would still use them if it were a mostly street rig. I believe that the engineers designed the FJC to run on 33's since the speedo was spot on, it handled great and worked very well off-road in 90% of situations I encountered.
Just my 2 cents...