"When you say within 1" of shell do you mean the adjustable part that is directly behind his head? Or the outer part of the car seat (the part that will be the booster once he's that big, does that make sense?)?"
On the AO, there are 4 harness slot positions, but 5 headrest positions (the top headrest position is ONLY for booster use, and you must remove the harness b/c it's not reinforced to use w/the harness). The top harness slot height that is usable w/the harness is about 15" on the newest AO's, maybe 15.5 depending on how you measure. The 1" rule in this case applies to the headrest portion (adjustable part) that is directly behind your child's head, and it only goes about one half inch above the shell behind it anyways when it is in the top position usable with the harness (position 4). This headrest is not removeable, and it goes up 2-3" above the back of the carseat's shell in booster mode (which you will probably never use anyways--you've got a long skinny kid who probably will not be 40 lbs at 4 years old, which is the bare minimum to go into a booster seat).
You will need another carseat later to keep him harnessed to a minimum of 4 years and 40 lbs, but that can wait until he's outgrown the AO both rearfacing and forward facing if necessary. If you have the money a year from now, you may prefer to buy a higher weight convertible seat to keep him rearfacing even longer and to keep him harnessed forward facing longer after that. Most kids can still rearface in a higher weight convertible seat like the Britax Marathon in the third harness slot (one down from the top) that is the same height as the top usable slot on the AO...so you've got more time to rearface in another seat if you prefer. Then, you could use the AO as a spare seat or sell it to help pay for the new seat.
You will have loads of options later to look at--Sunshine Kids Radian 65, Cosco/Safety First Apex or Safety First Biltmore, the new Graco combo seat that will go to 65 lbs and turn into a booster (like the Apex), Recaro Young Sport may work for you b/c he's a lightweight, Britax Regent, Britax Marathon/Boulevard, and of course, the Evenflo Triumph Advance, etc. etc.
To me, I know more about the carseats and safety than my dh, so I make the rules. DS is not getting turned, period. He's too little. DH doesn't fight me about it.
hths
henrietta