I've got a modest lift and mine stick out about 2" from the body, also no mud flaps. I think I am right on the limit of what I can get away with, but I drive like an old lady in my rig so I have never been hassled about it.
My understanding of the regulations are that you need to have the tire covered on the top and you should have protection that extends down to the center of the tire at the back either by fender, mud guard or flaps.
I do however do my best to avoid Red Deer and the Sylvan Lake area as my friends get a lot of heat from the police in those areas for tire coverage, mud-flaps etc.
I've heard there are a few RC's in Cochrane that get pretty sticky when it comes to mud flaps. Also that a few people have taken the "no mud flaps" ticket to court and won because firstly they don't reference the right section of the act, and secondly the requirement for mud flaps does not apply to passenger vehicles (most jeeps & trucks are registered as passenger vehicles if you check your registration slip).