Toe Clip Overlap may be quite common but that doesnt make it good.
TCO doesnt matter in a race or for a fast training session but in heavy traffic it can trip you up.
It is easy to say, "just remember to position your pedals" but in my experience, things go wrong when your brain gets overloaded. Most of my involuntary dismounts have involved 3 or more simultaneous hazards and a 4th was too much to handle.

My suggestion is to fit a 700c wheel, check your toe clip size and crank length.
You are small enough to use a 165mm crank. A M toe clip should gain another few mm over a L size.