There is no handy way to make the DragCue be displayed above the mouse pointer. What you can do if you can somehow calculate the height of the DragCue, is to set negative top margin.
As for restricting the number of records shown in the DragCue, I believe there should be no problem about that - after all you are the one who determines what, if anything, will be visible in the DragCue. Simply check for the number of records that is in the Payload and put only as many as you want in the DragCue.
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