It will fit with omission of the first 17mm nut. As you stated, the new nut is too large for the bushing to fit over and to fit into the frame. Leave nut off, feed up through frame hole and connect down below. (is my offset correct in picture below?) Now install bushing, washer, 17mm nut and then there is room for snugging it down.
My question is: what does omitting the first nut do or not do to the set up? Dangerous? OK?
Robot has an install video with Bitubo shocks and the nut is also 17mm. He simply placed the bushing over the exposed shock post, placed washer on, threaded 17mm nut and tightened it down.
I have not tightened anything down, only finger tight but it all seems pretty solid to me.