True, I've heard that overfilling leads to frothing of the oil, and hence loss of its ability to lubricate and cool, but as you say, I think that applies if one REALLY OVERFILLS. But it just doesn't make sense that a supposedly filled crankcase would only reach the lower notch on the dipstick, otherwise how would one know when he's down? As to type of oil, I've been using Castrol GTX (did use Mobil 1 for awhile, but not convinced of its worth for the type of driving I do), and with 213+K on the odometer with no engine troubles, I don't think I've been overfilling for all this time.
My own suspicions are that there was some change during the production run of the M50 engine leading to increased oil capacity that wasn't picked up in the printing of the owner's manual, but how credible this fanciful thinking might be is a bit doubtful in that I have come across zero references to any such modification, something that I think is significant enough to have warranted notice. But hey, who knows...?