When installing wood trim corners, I always have to rip 1-1/2" or so into the bottom of the front over-lapping one, to make it work. I usually caulk it, also. If you re-bend it in any way, you are responsible for any future leaks. Be safe, G
The roofer bent the flashing over sloppily. It should be re-bent so you can install front siding lower. I think you should also read this:
https://www.nachi.org/forum/f16/vinyl-siding-installation-guide-14964/index2.html
And possibly this: http://www.fourseasonsroofingandsiding.com/J.channel.leaks.htm
And lastly: http://www.vinylsiding.org/publications/0804_VSI_2007Manual.pdf
Be safe, G