Hey all4gss, someone not too long ago had the same problem with their rearsight. They fixed it by taking it apart, and reassembling it. It worked after that.
DO NOT get one of those cheep clip on the barrel bipods, or you may be shooting another 5" high. The flimsey mini barrel will flex enough that the weight of the rifle will change your POI (point of impact). If you are shooting with a sand bag, don't shoot off the barrel, shoot off the forestock. Try different ammo to see what your mini likes. Some will shoot way better than others. To work on accuracy for testing ammo etc you need to eliminate as much human error as possible, so shoot off a sand bag. If you get a bipod get one with an adaptor that fits on the gas block, or if you have a forstock swivel stud, you don't need an adaptor. I installed one in my forstock, so I wouldn't have to buy an adaptor. Use the search button for more info.
For reducing recoil, install gas port bushing kit from Mike Knifong. Do a search for more info. It will cut recoil way, way down. It is easy to install. Kit cost $25. Yes the recoil buffer, or shok buff Mike has will keep the metal slide rod from slaming into the metal receiver, it will be metal to rubber. A much softer impact.
As far as a scope goes, get the best you can afford with a lifetime warrentee. Stayaway form Tasco, they were just bought out by bushnell there warrentee is worthless now. I have a 3-9x40 leupold vari x II, waterproof, fogproof, shockproof. It cost $179 at academy sports. It is warrented for ever no mater who owns it, like a Craftsman tool. Another good one is burris. I have heard for a cheep scope Weaver is good.
As far as the cases hitting your scope, maby other members with scoped regular mini's can help ya better than I can. Reduced recoil will give ya a softer case ejection, maby a rubber coated scope?