Our 1989 built-in microwave stopped working, so I bought a replacement. The
problem is that the old microwave was huge, and the cutout requirement for
the new microwave/trim kit is 3" smaller in height than the existing hole.

The trim kit specs 15 3/4", the existing hole is 18 1/2".

Any ideas on how to fill the gap? Should I try to match the wood stain, or
am I better off using a contrasting material? I don't have a lot of money
to spend here, that's why I'm trying to do this myself. Any ideas and
suggestions appreciated.

A picture so you can get an idea of the cabinet material/color:
http://home.comcast.net/~jdmcahren/microwave.jpg

Thanks!