Well, clutch travel and engagement point is something that seems to be a personal preference on this board. If you do another search you will find some heated discussion on it. I recently went from a AOD to T5 set up, with quick release quadrant, fire wall adjuster, and king cobra clutch. 10 pounds of preload on the clutch cable(or clutch fork depending on how you look at it) is supposedly specified, which means that there should be NO slack in the pedal, or at least very little. I would imagine 87stang's suggestion of 1 inch of travel to be a safe bet, although mine has less.
With the above set up, the clutch engaged very high off the ground, much like yours seems to be. Also, the disengagement travel of the clutch felt like 2 inches also, making fast shifts really easy, but also making modulation of the clutch difficult. I recently found I hated that quick release quadrant, and changed it with a 3 pick up UPR one. With the same preload, the clutch now seems to engage at the middle of the clutch travel, making it feel much more like a conventional 5 speed clutch.
Stangbear, another member, mentioned that the King Cobra clutch plate is thinner than stock, so the engagement will be little faster, and possibly meaning higher off the ground.
Assuming you are able to adjust your cable tension, I would tighten until there is almost no slack in the pedal, and then back it off just a bit, and go drive it around. Irregardless of where it catches, make sure the engagement of the clutch is good, as well as the disengagement. If the clutch works fine, keep it that way, and learn to live with where it catches. The cable mechanism is really simple on the T5's: pressing in the clutch pulls the fork lever, which forces the throw out bearing onto the pressure plate fingers, which releases the clutch plate. If you loosen the cable, all it does is lower the clutch pedal, and when you step on it again, it will release at the top of it travel again. Loose cables will allow the throwout bearing to bounce on and off the pressure plate, and may shorten the lifespan of the bearing. It also may be a source of irritating clicks and clacks. As always, "your mileage may and will vary".