hi, the spacer goes on the shaft, on the other side of the seal block or whaterve the call it. You need to make it from a hard plastic rod and have an engineer drill it. Dont use aluminium or metal. all it does is stop the rod extending by that 3-5 mm so the dampening action is not changed much. It is the same as have the sag set slack, and the shaft down in the shock a few mm, but that translates into 25-30mm less in seat hieght. don't go more than 5mm, that goes to about 30mm on the back wheel as the swinging arm angle to the ground and handling is no good and you may not be able to absorb the preload and set sag correctly. Witht he front forks hopefully you will not need any preload as the spacer in the forks and you only need to do it in one will take up the gap. check how much you can play with here at the front before working on the back. You don't want to cut things and mess around as you want ot be able to reverse it for yourself and for selling. last time i did it i had right side up forks that had long plastic spacers that allowed me to take 30mm cut of it.....you cant do that with all forks. with the shock I have also experimented with moving the shock top mount up but that is a lot of trouble and cannot be reversed easily.
My current view is to go for the seat first. thake the foam out and cut a shape like a loaf of bread out of the base so the sides are left iintaked. replace with good quality foam, but softer. you will then maintain the shape for sliding up on the tank but when you want to put your feet down the softness will give you a couple of centeremeters.
I don't like the shock altering unless desparate. It is easy to do *********** is easy to work on. you can buy the refill bottle and get it gassed by someone or fill through the submerge method and then get someone to gas it. Just remember to triple check the circlip is in place as those filling it will get nervious if you do not assure them you have done that.
Do the seat, get boots that take booties allowing one size bigger, do sag to 100 to 110 mm on shock and slip the forks down as far as you can and set 35mm sag on front forks. put a small spacer under handlebar mounts, no more than 3mm and slide the forks up to help turning and you may need to preload forks to 25mm for handliing. Leave it at that!! ie only do the shock and fork spacers if really short. A little bit here and a little bit there and of course lowing the seat like shown in this site elsewhere, but try not to go past what I have said above. have fun, keep the bike handling well and have a style that does not require putting you feet down. sorry about the long winded babble