You can possibly "make it work" with a shorter stem, assuming both saddle height and fore-aft position are correct. DO NOT move the saddle forward merely to get closer to the bars, and the fact that you can pedal it does not mean the height is correct. However, it's much less likely that you can make it comfortable and efficient. I would never consider that much too large a bike for a touring bike, especially for loaded touring, where control is more difficult and dismounting could be seriously painful.

The links below may be helpful in determining fit:
Basic Bike Fit
Revisionist Theory of Bicycle Sizing