The oleo leg is designed to be fully extended with the aircraft airborne. The leg itself is a shock absorber with an internal oil bath and a nitrogen charge. The nitrogen is what causes the leg to extend and the oil passing trough a metering valve is what causes the damping action during compression of the leg with weight on wheels. The symptoms described indicate an incorrect ratio of oil to gas in the leg. Just requires a bit of the gas snifting out. If it then sits too low, thats an indication that the leg requires servicing with oil and gas. It's complete bollocks to say that this is normal or acceptable
. It's not really an acceptable situation for the leg to be extended beyond 4 to 5 inches with weight on wheels because it produces a longer lever arm moment acting against the oleo mounting putting unnecessary stresses into the wing under braking and on uneven ground. In the long run this will cause wear and damage in the landing gear and stress in the wing. Also, Cherokees have a history of torque link bolt and torque link failure. Operating the aircraft in this condition can only add to the possibility of inducing such a failure. If the torque link system fails, wave ta ta to the whole lower leg and wheel because the torque link is the only thing that keeps the lower leg from parting company with the upper oleo housing and that would tend to ruin your whole day
Edit: just remembered that sliding portion (lower leg, seal carrier and Wheel and brake) is held in the upper housing with a circlip. The torque links keep the upper and lower parts aligned. If the torque links fail there is nothing to stop the lower leg rotating within the upper housing so there would be a possibility of the lower part turning 90 degrees to the normal direction