You usually won't even really notice the front sight in the scope. You won't be mounting your scope on low or medium rings anyway unless your eyes are mounted in your nostrils. You'll be using some sort of riser, either in the rings themselves or the base. The "PEPR" style mounts have been very popular the last few years, but there wasn't anything wrong (well, nothing substantially wrong at least) with the pic riser blocks we all used to use. More and more uppers are coming with integral EOP's, but I'm assuming when you say 'flat top', you're talking about an A3, not an EOP upper.

Not saying there's any reason to not replace the gas-block, but having it in the way of a scope isn't a valid issue. Flip up rear sights are quite often the same height as the A2 carry handle sight would be, so they'd be compatible with the fixed front sight. As others have mentioned, occasionally you can get yourself in trouble by mounting the folding front sight to a flat top gas block, because it's shorter than the handguard rail that the folding sight was designed to ride. The solution is to use a sight riser, or an extra height gas block that mates up to the height of the handguard.

Interesting to find out it's a DSA Lower. I wouldn't buy one myself, but as others have mentioned, all you really need for an AR to shoot well is a good barrel and a good trigger, then the rest is just a matter of having a good smith fit all of the parts together to feed properly.