Is my driveshaft to short?

I would have liked it a bit more engaged into the trans.

Having said that, - if it were. MY car, I would try it , expecting a possible vibration .
Another type of rear trans seal has a dust boot that sticks out about an inch beyond, and you got about an inch more than usual - hanging out .

That's just for me , jmo

You know that's right about the seal. If you look closely the markings on the slip yoke could be showing that type of seal wear.