Rehabbing stairs, need opinions on how to trim them out

Rehabbing the stairs to my basement, going from carpeted to hardwood. Going to use a re-tread product (like the ones at Lowes) I have a question on how to trim out the stairs before installing the treads. The existing treads are 2x dadoed into the stringers. The nose of each tread comes out past the edge of the stringer (pics below). To leave them as-is I would have to notch every new tread on both sides to accomodate. Seems like a lot of unnecessary work to me. What Im thinking is to cut the extra wood off the nose of the treads so the replacement treads can be cut straight from nose to riser. The pics below are one side of a tread with the extra cut flush and one side with the tread as it is right now. If cutting the extra off is the way to go, the space that needs to be filled without the extra "nose" is 1-1/4". I was thinking of stacking 2 base moldings, one taller than the other. Any other ideas for that? Or is the best way just to notch the new treads? I was worried that would look funny though, since there would be no "skirt" to butt it up against where it overhangs the existing nose.