Server Rack - Rail extension?
How about physically mounting the KVM further along on their actual fitted rails - you'd have to drill at least four new holes for the screws to go through and there's a chance you might not be able to close the front door but it would allow you to open it up a little extra?
Is that little extension of the top of the rack structural? Grab a jigsaw, stick in a metal-cutting blade and slice it off. :)
More seriously, if it's a short enough rack that you need the screen tipped up (>90 degrees), why not just mount the KVM in the rack and put a little LCD monitor and keyboard on top of the rack.
Ghetto solution: Get a sheet metal punch, or some hardcore tin snips or a CNC laser if you can get fancy (and maneuver the rack into the CNC machine... it owuld have to be a very unusual one I admit) and cut the annoying lip off. You can file it down and put some pretty plastic edging on it to make it look nicer.
Well it's obvious that whomever mandated the requirement that the KVM be mounted in the top U is a pointy haired boss. It seems to me that aside from all the wonderfully creative and fine engineering examples posted as answers, that changing the requirement as to the KVM's mounting position is the easiest solution.