I'm using the 12mm studs and can get to about 7.5mm.. I am pretty sure you can get to 5mm with the shorter studs.

I never used the original slipper, but here nothing good about it. I here it glazes pads very fast. Maybe look for the updated slipper or at least try some of the RC Shox Garodisks.

Again, maybe somebody that knows more about that stock slipper can chime in with some advice for setting it up.