I flipped the picture for you..hope you don't mind...
From the picture and your description I'd say the situation is far from perfect. With small gauge tools, such as a 3/8" spindle gouge, or when using a parting tool, you'll probably have no problem, but larger gauge tools are going to be a problem. You will find that you have to bring your handle much further upwards to take the cutting edge down to the centre.
From the picture it looks like the weld at the top of the stem is very heavy, and wonder if an engineer couldn't clean that up a little for you and allow a few mm more drop in the banjo. It needs to be done by somebody who understands what they are doing so that the rest remains strong enough for its purpose.
I do feel though that you should not have to make adjustments, or buy/make replacements for a newly purchased lathe. Record should be fully aware of the need for a toolrest that can be positioned bellow the centre line. You could use their large spindle roughing gouge safely using that rest because the cutting edge would either be far to high (above centre), or else the handle would need to be held far too high risking a catch and a snatch.
I know a lot of turners with older CL machines and none are set up like this.
Whatever you do, be careful when using it!