Plan on smoking a picnic ham, 8.5 lbs. Good 1/2 inch fat on it plus skin (on one side). Gonna give it a good rub and definitely leave the fat, but should I remove the skin to get the rub onto the fat or no?
Leave the skin?
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A "picnic ham" isn't really a ham at all, it's the bottom (leg) end of the shoulder. The skin, like all pork skin, is (a) delicious, and (b) best crisped. If you cook the pork to an internal of over 190, the skin should be fine. But if you're going low and slow and to a lower final temperature, it may never get the texture you want.
When I get skin-on shoulder -- picnic, butt, or whole -- I remove the skin in a single piece, season the meat with the skin off, tie the skin back on, then season the skin. It requires some butchering skills. But if your knife is reasonably sharp, you know your knots, and you don't rush, it shouldn't present any insurmountable obstacles.
You may or may not want to trim some of the fat from the pork before cooking. There are no hard or fast rules, nothing which came down from on high on tablets of stone. It depends on the particular piece you got. Some shoulders -- particularly picnics -- can be very fatty. Excess fat you won't eat prevents you from seasoning the meat and from the wonderful "bark," aka "Mr. Brown." On the other hand, pork fat is highly palatable and a fair amount will enhance your pulled pork. Not to overstress the point, but it just depends.
Injecting makes a big difference with shoulder. I don't think there are many top barbecue competitors who don't inject pork shoulder anymore. Whatever you do with the skin and however you trim, consider it.