Short answer, yes, the bottom of the grooves in the nut should be lower than the top surface of the zero fret.
When using a zero fret the nut becomes more of a string spacer. I cut mine deeper than the top surface of the fret board to make good contact with the zero fret.
I use maple for my fretboards so I use maple scraps for both my string spacers and bridges. I've had no problems with it and I would assume red maple would be just as good.
Hal, that's an elegant looking nut/zero fret setup...
Hi Jon, I would suggest removing the fret, saw through the fret slot so it becomes the end of the fingerboard and in its place fit a "spacer nut" made out of bone, brass, plastic or even a hardwood like ebony or maple. Violins etc. have wood nuts.