What kind of rims do you have? I have 33" x 12.50" Mickey Thompsons on stock offroad 17" rims, and I have no rubbing at all on my STOCK HEIGHT Titan. In fact, I have lots of clearance, and I'm pretty sure with a leveling spacer that I could fit 35's. If you have stock rims, you shouldn't have any rubbing at all with the lift kit you have. If you have aftermarket rims with a negative offset, then you can just do the pinch weld mod, take off the mud flaps and you will be good. But there is no way you would need to have more lift to fit 35" x 12.50" tires. Lots of guys have 35x12.50's on their trucks with the same lift you have, you just might have to trim a bit if your rims have a negative offset.
*edit*
sounds like you need the pinch weld mod. here's the link:
http://www.titantalk.com/forums/titan-faq-howto-area/48315-simplify-pinch-weld-mod.html
Yeah, the manufacturer recommends minimum 8" wide rim, whereas the stock offroads are 7.5" wide. But I have no problems with mine. You just have to rotate more often to avoid uneven tire wear.