dubes

At the risk of asking the obvious, does the stem's minimum insertion mark indicate how far into the steerer tube the stem should be inserted, even if a section of the steerer is above the headset / outside the headtube, or does it represent the minimum amount the stem should be inserted below the headset's upper race, i.e. seated inside the headtube proper? I am particularly concerned about where the stem's expanding bolt should be in relation to the upper headset bearing race.

I have a bike with a 1" threaded headset, and between the cantilever brake guide, spacers (about 12 cm worth), the upper bearing race and the locknut, I estimate there is about 60 mm of insertion before my stem even enters the headtube. At maximum insertion, i.e. before the stem starts to taper and I can't insert it any further, I measure there is only about 35 mm of stem seated inside the actual headtube, and this is almost entirely the size of the expanding wedge. Is it a problem for my stem to be seated so relatively high inside the headtube? In particular, does it stress the headset if the expanding wedge is pressing up against the inside of the steerer tube at that point?

Thanks for the help,
Mike