I was planning to use an American Tackle Aero reel seat 17mm with a CFX carbon fiber full length grip. Concern I have is that the grip diameter where the grip inserts into the reel seat housing is narrower than the reel seat opening, leaving about a 1/16" inch gap around the entire grip. I don't like the gap from an appearance or function standpoint. Is there a way to use this reel seat with this grip handle, (like a way to seal the gap that will look decent) or is this just not a good match?

If you bought the spinning grip and not the casting grip I could see you having that problem. The graphite .980" ID tube and standard 1.1" cork grips fit the 17mm, the .920" ID tube and spinning grips fit the 16mm unless they redesigned things.

Make it uplocking and make your own CF part to fit and you will have a very comfortable arrangement. Still looks a little goofy, but it works well. No fingers on the seat threads, nice smooth transition to the blank.