My thoughts exactly. It can be set up without fenders like this:



I would personally put it lower on the bike so there wasn't so much gap between the tire and the rack, but one would want to test fit panniers first I suppose.

It's currently 20% off at Outside Outfitters, just be prepared to wait a month or two for it to arrive...

I have two of them and think they really look slick, especially with fenders: