I talked to my mom (craniofacial nurse) yesterday evening, and she said she would include the helmet in the measurement because the helmet is not protective or anything. She asked me what the 1 inch rule is for, and I said to prevent the child from ramping up out of the seat and sustaining injury. She said, in that case, you do need to include the helmet in the measurement, because if it is hit it will transfer forces directly to the child's head-- it's not energy-absorbing like EPS foam in a bike helmet.
She also said that if possible, a child with a halo should have shell over the equipment as well as the head, too, now that she thinks of it.
Of course she also said that if the child has positional plagiocephaly she would highly recommend moving to a convertible because that way mom will HAVE to take the baby out of the seat when leaving the car. She has kind of a thing against babies being carried around in infant seats. I think it might be genetic.