Wide Rub Rails
I have only sailed one Windmill for a short time that had wide rails. I found them to be more comfortable on this short sail. I did not have the chance to test them for hiking comfort on a long windward leg! My reason for suggesting them is two-fold. (1) The ability to cut hand holds. Beach launching a wood Mill is more difficult as you can not get a grip on the rail! (The rails on the plastic ones are an inverted U, easily grasped) With such grips, four normal people can lift and carry the boat.
When the wind is above 15, you can broad reach on a plane and as your speed increases you want to get the bow out of the water. (to go faster and to keep the bow from hitting a wave and stopping you damn quick. Anyway, the faster you go the more you want the weight in the back. When the wind is past 25, the boat will be out of the water almost back to the DB and you will be behind the thwart and your crew will be right next to you. (Well, to be honest, this may only happen for a instant the first time and then you will be swimming. But, it is sure to give you an adrenaline rush and make you want to do it again)
OK, now I am to the part on reason 2 for wide rails, but I still have to try to explain one more thing. When I said behind the thwart I meant it two ways. Young agile folks have hiking straps behind the thwart and move their whole body back there. I could do this 10 years ago. Now, I hook my feet in the straps, move back as far as I can and angle my body about 45 degrees to the keel (rather than 90 as when hiking to weather). Since more of one side of my body is unsupported than the other, i.e. one cheek is on the rail, the other is in space, it makes "coming in" - getting out of hiking position more difficult. (You are literally doing a sit-up) I also feel less able to make minor changes in my weight placement. I think a wider rail would be beneficial to support my body and make hiking in this unnatural position a bit easier. I wrote all the above, just to try to explain it. Sorry!
HOWEVER, this is theory, I have not tested it.
On shaping the rails, shape them so they look good to you, but do not terminate them at the thwart. Else you would not have them for either of the purposes I advocate them for. I would flare them into the coaming about 18 to 24 inches forward of the transom. You do not want anything behind this area that the mainsheet can catch on. Murphy's laws applies here - a line will catch, bind on most anything. I would round the rails (narrow or wide) as much as possible. A sharp edge in the back of your thigh is not comfortable.
I would have a wear strip, but not AL. That would be really ugly on a wood boat. Maybe brass? Nah! Maybe route the center of the rail to accept a wood strip that is screwed, not glued in, so it can be replaced without too much trouble? May I suggest that you put this question to some other people, people that have been there, done that.