The wire is covered with epoxy resin, so there shouldn't be any damage done to the rope.
As you have said Wouter, It is not perfect, but it was only a test. I may cut the shrink tubing off as the eye seems almost too stiff. The pulley has not completely pulled through yet and the big eye seems to do no harm. If I made another though, I would probably make the eye a bit smaller.
As far as the spacer question goes, if you look carefully at the picture you will see I don't need one. The plates can't be pulled together because the prussik is in a double configuration. Ie a bight of rope goes through each eye. That pulley is the pinto rig btw. I considered the smaller one, but the sheave efficiency is less compared to the rig.