If I run the stone up to the drywall, then the gap to fill will be smaller (since the cut edge of the stone will meet the relatively flat drywall). If I run the stone past the drywall, or think of it as the drywall butting against the face of the stone, the gap will be larger due to the uneven stone surface.
Generally it seems a smaller gap is better. However, if the stone goes past the drywall it is more likely to look like the stone is part of an actual chimney which extends outside, past the wall, and not just a veneer. I am concerned that the situation with the smaller gap will "telegraph" that the stone is just a veneer.
Any advice would be much appreciated. Thanks!