It's kind of interesting that your plugin also displays what happens beyond that fixed area, but it probably shouldn't?
They all do it, the difference is they create the panel for them to be displayed in and draw the meter inside it. Anything that goes outside the bounds of the image isn't seen by the user. Because the panel it's drawn in is always the correct size.
With musicbee I insert an OpenGL element into the panel which can be made to any size by the user. So my draw space is the whole panel and I don't control it's size. When I draw the meter I have the aspect locked down, so I draw it to the width of the panel and the height is determined by the aspect ratio of the original image. If the panel height is greater than the aspect of the image, it won't fill the whole panel which exposes elements that go out of bounds.
If I didn't lock the aspect ratio, the meter would always fill the panel and you would never see out of bounds elements but then the user has to muck around trying to resize the panel to get the aspect right. I thought maintaining the aspect ratio was more important than some empty space in the draw space that I thought most people would just resize to make go away.
It shouldn't be a problem, I can just add a final step to draw over any empty space at the top of the panel with either black or the current MB skin colour and that will hide any out of bounds objects.
I figured out the problem with the vertical line when merged skins are set to a large size, it will be fixed in the next version.