Technical Ted has it correct, and so does ddickey. The quill extension would not make any difference in the amount of error, but the longer the beam of the tramming tool, the more accurately you can tram the head of your mill.
Keep in mind that a longer beam on the tramming tool would not increase the actual error, but it would increase your ability to see if the tram is off at all. The longer beam would, in effect, make your tramming tool more sensitive. Natually, if the beam is so long that the DTIs don't touch the table, the tool doesn't do you much good. It looks like Derrick made his beam just the right length for his mill.