If it were mine, I would keep that bracket. It's there to tie the swingarm to the side frame tubes for stiffness. I know this is a street bike, but I once followed a 350 Honda around the race track without those plates and the rear wheel was moving in several different directions. It's better to keep the plates. The bike will feel much nicer to ride even on a mild curve. Without them it might look cool but handling will be vague.
You could fit your pegs in those side plates, or modify the plates to allow the new rearset brackets to fit over them.