Yes, it is possible for reach to actually be too short. You know it when you feel it. You feel like you're hanging way out over the front hub, and your knees may hitting your chest even when you're not in a super low position.

I'm not an expert in this and other people may correct me, but I think what you might want is not so much a shorter reach, but higher bars, achieved through taller headtube, more stem rise, etc (although if what you had was really too long, it would still be too long even if you raised the bars). I think there's a range of reach lengths that are workable for each person, and you may find that you tend to be more comfortable on the shorter end of the range. But it definitely is possible to have a reach that's too short and it's not comfortable either.