head position, whether below or above withers, is irrelevant (assuming it’s what you’re asking for/allowing)
What matters the very most is what the back end is doing (which impacts how well the back is working)
If the horse is lowering his head and dropping his back, then his head is too low because he’s been allowed to not engage his hind end (enough)
Even a stretchy trot, forward down and out (FDO) needs an engaged hind end and back
I’d allow some stretch at the walk that’s not engaged, before I’d allow at the trot or canter . Sometimes, you just gotta stretch
Otherwise, I’d ask for engaged stretching on contact, OR, “go as you please” without contact