We've been through this before but I recently had another case and found some new discussion of this in the sefer zichron Eliyohu, which I did not previously notice.
It is well documented that we are more lenient about parshiyos protruding into the titurah elyona of the yad than by rosh - reasons are well explained in perek aleph siman daled (of the sefer zichron Eliyohu).
In a phone call to Rabbi Moshe Shaul Klien Shlitah some years ago he echoed this understanding by telling me that if the parshiyos (letters) protrude a little into the titurah elyona in the shel yad the tefillin are still geder mehudar, but in the shel rosh not. (Obviously it cannot extend into the area opposite the "filler" (piece added into the titura in the middle) which does not have the din of bayis. he is talking about the titurah section above the filler).
Regarding shittas Chabad, I have heard conflicting opinions based on S'A HaRav, with most rabanei morei horoah explaining that since S"A HaRav only mentions this issue by tefillin shel rosh, the shel yad would be OK if it protrudes as little into the titurah elyona.
Those who are machmir cite S"A AHrav 32:77, where titura is not cosnidered to have the din of bayis. However many say S'A Harav is talking about a type of bayis where the titurah is a different piece of hide to the bayis (this is why he insists on knofayim). However gassos batim today are made where most of the titura is made of the same piece as the bayis (in miksha batim ALL of the titurah is the same piece as the bayis) . Therefore by gassos we dont have to be choshesh to this.
The chiddush here is that I never saw this clearly in print before, and noticed it for the first time on Friday, in sefer Zichron Eliyohu which is quite heavy. See below.