Wolf, it's not a good idea to have the overlay longer than the fades in this case. If that area is bending, which it will be since it's longer than the fades, it will more than likely pop off.
If you sandwiched it between a backing then you would be fine to have it longer than the fades. That's what I call a power lam and I do that on most backed bows I build.
That's why you see those overlays like in skeater's pic where they stop in a none bending part of the handle well short of the fades.
If you do an overlay like in the pic, there's no limitations to what you can use there.