Since I have the independent lift, my situation isn't directly applicable, but my results are very similar to Hammsman. Note that with the independent lift, the only adjustment is the turnbuckles on the mower lift arms. The lift cylinder has no length adjustments. My blades are about 5 inches high in the "lock up" position, 3-1/2" at the first notch and 2-1/2" at the second notch ("H") position, down to about 1-1/2" at the "M" position. At the "L" setting, the deck sits on the floor.
My conclusion is that the system is functional but far from optimum. I would like to be able to linearly set it at heights every 1/2" all the way up to about 6" high. There is no reason the system could not have been designed this way, but it wasn't. That said, it still works fine for me.
It sounds like you need the adjustable rod. Did you ever check the clearance between the frame and uplimit stop at the lock up position? That will tell you really quickly if you need more adjustment to the 3 point.
The blades do not "overlap" so they will not touch. That is why the center blade is offset from the other two. If you could look through the deck from the front, you would see a slight "overlap" in the 2-D view of the blades. Blades can't actually overlap unless they have timing belts, which almost none do.