Simon,
I can give you one data point. My early LS-6 came with only the bottom of the
wing sealed (mylar type, venetian blind, I think) Anyway, she didn't get her
killer climb, until I added mylar to the top of the wing. These were just stuck
on and not recessed into the wing. As a general rule, I would say that
recessing is better, but a bunch of work and if done by unskilled hands, could
result in a mess. Use trailing edge guides on your router and monitor the depth
very closely.

Before you start, I would lay a straight edge across the wing / aileron
juncture, see if lowering the wing side (routing out) will cause the mylar to
be forced up as it hits the aileron. This should not be allowed and will lead
to mylar separation when left in a hot trailer. BTW, the mylar width should be
just wide enough to just touch the control surface and shouldn't be forced up
when the control surface is moved. If hinge gaps are too wide to allow the
mylar to completely cover the gaps, then use a *gap bridge* made of thin
plastic or wide tape. Thake a good look at an ASW-27, Schleicher's attention
to detail is something to behold and the cleanest set-up I have seen.
JJ Sinclair