I bought a Squire Showmaster cheap off Ebay a while back and it has this kind of heel. The carve fits nicely into the palm of the hand, once the corner is taken off the rest of the heel isn't in the way at all. I'm not sure removing the rest of the wood would make a difference. Try to find a guitar that has this heel and play it to see if you need to take the extra wood off. It's probably more about how you want it to look, I think both would be just as functional. Just my opinion, if you want to take it all off you should go for it, it's your guitar after all!