The wheel studs on my Pro-7 car are 12 mm diameter (0.472 in) 1.5 mm/thread. Standard nuts (same material as stud/bold) for a 12mm-1.5 bolt are 0.389 -0.398 inches tall. The rear axle flange on my Rx-7 is 0.410 thick. Most wheel studs I have been able to find have a tap end length that is 1 times the stud diameter. On the basis of this I believe that, for similar material strengths, as long as threads engage for one stud diameter less one thread, they are strong enough. If I were to lengthen the stud and wheel nut, no additional strength is gained, since the strength of the assembly is limited by the threads at the rear axle flange. In the case where the tap end is in a weaker material (example?; cast brake rotor/hub assembly?) additional engagement in that material should be used. There are standard stud designs with tap ends of 1.0D, 1.25D, 2.0D and 2.5D, though they can be hard to find. (Try Maryland Metrics.) The strength also depends on sthength of materials and thread fit tightness - tighter is better. I have found 12 mm - 1.5 wheel nuts with heights of 16mm, 18mm, 22mm and 1 inch (25.4mm). I believe the wheel nuts are taller than standard nuts not because they need to engage more stud threads to provide strength, but so they can have a conical tip to mate with the corresponding area in the wheel and so enough nut is left sticking out to use a lug wrench or impact wrench.
I don't think this rule should be passed because it takes a good thumb rule - nuts should have 1 thread protruding to ensure full engagement on a bolt/stud - and applies it to a situation where nut height is determined by other factors.