For touring, your handlebars should be at whatever height you're comfortable with for riding several hours a day. For some, that means above the saddle level. For others, it means level or below. Was your friend trying to help you solve a problem? I.e., were you complaining about being uncomfortable?

It's hard to tell how far your existing quill can be raised. All of the quills I've ever seen have a minimum insertion mark. Don't exceed that. If you want to raise your bars higher than your current quill will allow, there are several long-quill stems available.