I understand factory and assembly tolerance, but when I said 4-5mm more than necessary, i meant 4-5mm more than necessary for the given frame and gearing. Which seems more than necessary tolerances for safe assembly with different combinations.

Danno, I like your method of machining the edge of the hub shell so the freewheel can screw on further. I wonder why so many hub shells were designed with the freewheel sitting further away than necessary. That's pretty impressive you've got 30k miles on a rear wheel with 7spd freewheel. Even with my work to minimize dish whenever possible (specific to the frame and gearing combo, which I understand wouldn't be done on most less-expensive bikes), I still easily bent the axles on bikes with 7-speed freewheels. But to be fair, those have been cheap solid axles on commuting bikes.