Hi.
A 40mm drop would be fine on 17's. You'll get a little bit of scrub on the rears over bumps, and you'll get it alot if you have people in the back...but people who tend to lower their cars don't usually cart people around in the back, so im guessing you'll be ok...
You may also get a little rub on full lock, but i really do mean turning the wheel as far as it will go....again, should be ok. You don't want wheels any wider than 7j (7 Inches), as the fuel pipe runs along the inside of the drivers rear arch-getting anything wider than 7" run's the risk of the inside of the wheel rubbing the pipe, creating a hole and losing petrol.
If you're running standard shocks-make sure they're in good nic, otherwise body-roll will be very noticeable. Bilstein used to do a street kit for the 400 series, comprising of uprated Gas Shocks and 40mm springs, but wether they do it anymore is anybodys guess. If you get a decent set of replacement Oil filled shocks (KYB Excellence are very good replacements), and replace the wishbone bushes (or even the wishbones themselves, available from Braydon Motor Co at about £45 per side), you'll notice the handling improve no end.
You'r going to get a bit of negative camber on the rears, so you're tyres may wear a little quicker than you're used to-rears aren't too bad, but fronts are, especially if the tracking is even slightly out. You want a compromise on hard/soft. Avon's wore too quickly on 17's, Yokohama AVS Sport are excellent all rounders-good in dry and wet, but also longevity too. I'm bedding in some Toyo Proxes, T1-S's at the moment, but on 15"s...they handle like a train on a 40mm drop, but how quick they'll wear i don't know. The best compromise i found on 17's were Kuhmo's. £47 p/corner fitted, good in the wet, and good when warmed up too. And i found the best tyre size to be 205/40/17, in my opinion. Others may disagree!
Hope that's some help...
