The power lam simply moves the working area towards the outer part of the limb. The part of the limb with the power lam is still a working part of the limb it just does not bend as much and takes some of the pressure off of the fades. It helps to eliminate overbending at the fades and smooths the drawn limb profile out significantly when done correctly. It is not necessary to extend it far past the fades , a couple of inches will help bunches.
As to whether it shortens the working area of the limb depends a lot on the design of the individual limb. In a recurve for instance it may just cause the tips to open up a bit more , change where the limb is working. or if you use sufficient tip stiffnere or geometry it may cause the outer portion of the limb to work a bit more. I would say that rather than shorten the working area it more like proportions it.
God bless you all, Steve