Yes, you have a very good looking bike there. Congratulations on finding one in such nice condition.
I think that stem is just raised EXTREMELY high - probably to accommodate the very deep drop handlebars. Using bars with a flatter "ramp", shallower drop and with the brake levers placed higher, the stem would look pretty normal. Before you toss the stem, try tilting the handlebar up so the slope down to the brake levers is more level with the stem. Then you should be able to drop the stem down a couple inches to a more "normal" height - and without making a big difference in your shoulder height.
Below is an example of a similar bar on one of my French bikes. The stem and headset are blocked by the bell, but stem height actually measures just around 3" (75 mm.) from the headset to top of stem. Saddle top is only 1" higher than the top of the stem (I like to keep them pretty level with each other). I can comfortably ride (and brake!) either with my hands on the hoods or with my hands in the "hooks". Not my favorite style bars, but useable this way without dropping my shoulders too low and straining by back and neck. ~ I think my bar now looks a bit odd, but I often see them tilted like this in old 1970s catalogs, so it was actually pretty common back then.
