Yes it cuts the fork tube thinner in half. the thickness.. but I have seen Some bikes
that mixed a threadless 9/8 fork and a 7/8" quill stem with specially made parts.
these were Koga Miyata touring trekking bikes not a Italian Race bike..

threadless forks come in 1" and 1_1/8", threadless stems are all 1_1/8 with a shim back to 1".

what is the OD of the fork you have?
it looks like a threaded one with a conversion and a threadless stem.

benefit of thereadless setups is the spacers can go above and below the stem.
so you can ride the bike for a long time , before making the final decision
as to where to saw the fork steerer tube off.

I thought Excel in Colorado had Gios stuff, maybe they will sell you a threaded fork.