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Should I cut the under layer just to deck size and then only have a single layer to wrap around the rail?

The first layer you can cut to the apex of the rail and then the second layer can fully wrap over the board to the bottom. Just follow the outline of the board with your fiberglass shears touching the board all along the rail.
You can trim the fiberglass back a little at the nose and tail so there is not multiple layers of fiberglass overlapping.
This way the board is stronger to resist buckling and more ding resistant on the rail