While both "Ronnie Roadster" and "Bored and Stroked" possess stellar reputations and impeccable track records when it come to flathead engines, I'm going to play "Devil's Advocate" here. I have always been a stickler for proper spark plug fitment. I firmly believe that there should be full thread engagement between the plug and the head, for both plug retention and performance reasons.
Cast iron is stronger than aluminum, and aluminum heads almost always have deeper threads for better plug retention. I deal in a lot of used 8BA aluminum heads, and just about every pair I come across has at least one (and usually more) spark plug threads that have been repaired. I rarely see this with cast iron heads. In most of these cases, I'm sure that is was the result of some overzealous "rookie" applying too much torque on installation. Nevertheless, there is a reason just about ALL aftermarket aluminum heads have plug holes with more "reach" than the stock iron heads.
When it comes to performance, I just cannot believe that a badly shrouded plug will be able to ignite the mixture as efficiently as one that presents it's energy directly into the incoming mixture. Below is a photo of one of a set of Edmunds heads I recently purchased. Notice that almost half of the plug threads are full of carbon, the result of running 3/16" reach plugs in these heads. All eight plug holes looked like this. The next picture shows an Edmunds head with the proper spark plug installed. Edmunds heads are different from all other manufactures in that the spark plug has been relocated enough so that it does not sit directly above the exhaust valve, allowing the use of extended tip plugs.
It is inconceivable to me that the engine with the shrouded plugs could run anywhere as well as an engine with the proper plugs. I do not have the resources or the inclination to make comparison dynamometer runs, but I would bet a significant amount that an engine with the proper fitted plugs would return better numbers than one with shrouded plugs. I have taken to running Edmunds heads exclusively because of this feature and believe they are a definite improvement over the Offenhauser's that I ran previously.
One last thing that comes into play is that running a short plug that does not have full contact with the entire thickness of the head will interfere with transfer of heat from the plug to the head (and thence to the cooling system).
As an aside, I have found that there are no stock plugs that fit either Edelbrock or Offenhauser heads exactly without using spacers. I have acquired almost a dozen examples of them both new and used, and am performing an evaluation of spark plug fitment on them. It is beyond the scope of the present thread, so I will be doing another thread on the results I obtain in the near future.