I'm a very "aesthethics guy" and it annoys me a lot that when I make my own wallpaper and set a new Home Screen wallpaper, WP changes its position (always moved a bit to the sides and up/bottom hidden). Is there a way to remove this reposition? AFAIK, WP does this to "add wallpaper" to the Installed Apps screen. Example (from bottom to top) to reproduce the problem.
You already described the problem - Windows Mobile extends the wallpaper to the "Installed Apps" list, where you find the "rest" of you wallpaper. This is a similar behaviour of the old panorama/hub behaviour when scolling sideways.
Guess the only workaround is to "try and error" the size of the piece of the picture you want to show, which means try a bigger image section when choosing the background picture until it fits into you start screen.