you don't really flatten in AI you group. I know, group means something different in PS but in AI it will group all the shapes and text together so you can resize them all at the same time. hold ctrl+a and then got to object>group. VIOLA
this isnt the greatest example but you get the point it can be done. you have to cut the reflection and then skew and play to get it right, and then put the pieces back together it takes a long time just to get one piece right.
you should be able to just type the 88 then select it and go to ARRANGE/MOVE OBJECT FORWARD or MOVE OBJECT BACKWARDS because illustrator writes everything on one layer you can arrange each graphic independently.
the link is not working so i cant see the pic your trying to edit but if you use the pen tool in illustrator and trace the white you want to remove then you click on that shape you just drew hold shift and click on the background so that both layers are selected at once then go to OBJECT/CLIPPING MA...
why not just use the pen tool it takes some time but you can cut it out without the jagged edges. just set the pen tool to paths and when you finished tracing it go to your paths pallete and right click the path layer and hit make selection and viola one perfect tree. would you want to pen tool tha...
use the pen tool set to paths and trace around the edge then go to paths palette and right click and hit make selection then hit copy and boom perfect people cutout.
put the skyline layer over the logo layer, select the skyline layer and hit ctrl-g. this will group the two images and the skyline will be inside the logo you can move the skyline around and resize it anyway you want.