That's a good cut-line. It preserves the contour right up to the point of separation. The area behind and below the rear fenders needs a box cavity/diffuser.
I don't know if you've seen the studies I did in 3D and in redwood to find the optimal boat tail shape:
Rather than the fiberglass kit, you could graft on some other car's sheet metal. I suggest the roof from a 1948 Studebaker Starlight coupe with a V-cut down the center top to fit it to the Beetle's width. Or replace the rear quarter windows with the halves of a split back window.
There's the work Breers did for Chrysler in the 1930s. And here's the redwood experiment:
The reverse curve adds 4ft. A regular 45 boat tail adds 3ft. A 'phantom tail' truncation at the stock length would be at that box former.
The tail lights in that instruction manual picture reminds me. I don't have a picture, but the tail lights on the car in my avatar were swapped side-to-side and mounted at a shallow V angle, like an old Valiant.