I think you are right. I saw a video once that showed the results of overfilling a rear diff. It might have even been a Banks video. Anyway, if I recall correctly, overfilling leads to foaming, which results in reduced lubrication.I don't think you're supposed to get (too much) gear oil into the axle tubes. They do have seals but I suppose that's more cases where the gear oil gets splashed or spilled into the tubes (during hard turns, for instance). Look at the position of the fill port on diffs. It's always just below the centerline of the axles, isn't it ?