in that pic, it only has extra space on the side. it looks like it has no extra space at all on the top or bottom.
the screen size is measured diagonally from corner to opposite corner. an 8" screen is wider AND taller than a 7" screen. it's probably a little under 1/4" more at the top/bottom.
you'll probably lose some screen visibility on the top/bottom, but you may be able to adjust the monitor settings to correct that (however if you do that, it would defeat the purpose of using a bigger screen in the first place

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it looks like a 7" screen would fit best, but i would remove the LCD/touchscreen from the monitor housing so that all you see is the screen (not the plastic housing around it), it would look much cleaner that way.
good luck