I have 1.5" (40mm) sticking out above the stem. Reason is that my handlebar has about 75mm of rise (reason for THAT is too-short steerer tube on last bike). Aside from the fact that it doesn't look very esthetic, is there any problem with that excess length?

The current setup is perfectly comfortable. My concern is that if someday I get a flatter handlebar, I might need some of that extra steerer tube height.