Collision radius is, if I recall correctly, what the engine uses for its "is that thing close enough for me to shoot at?" calculation - having a collision radius that's too high results in weapons firing when they're not in range, while a too small collision radius results in weapons shooting "through" shields and other oddities. Generally you want it to be... I think about 10 pixels out from the farthest-out edge of shields or hull? (Doesn't need any great precision, though. And I find myself wondering, sometimes, why the game engine doesn't just calculate this itself.)
Also, there are some oddities with shield radii that don't cover the whole hull; I forget the exact details, though. Not relevant to the fly anyway, since it doesn't have shields.
Anyway - extreme difficulty may be accurate for that mission with base hulls, but the XLE carrier can solo the thing if you give it an explicitly rockfly-killing variant; I suggest incinerator beams, beamers (but not in the rear-facing slots), and every range and speed increase you can get.
Of course, since the rock fly is zero fleet points, the mission gave me 0% completion for a flawless kill. :-P