Yes up travel is limited with a longer shock. However with bigger tires that's not always a bad thing. With heavier duty leaf springs they may not compress as much either. It is easy to adjust bump stops to not damage the shocks on compression.
The key to longer shocks is more overall travel. Usually a 1" longer collapsed length equals around an extra inch of travel, since you can fit a longer rod inside the shock body. Generally you put together your spring pack and let your axle down to full droop the with no shocks. The spring/shackle setup is going to designate how far they droop. Then measure the eye length of the bottom shock mount to the bottom of the top stud mount. This also helps prevent the spring pack from trying to tear apart a shorter shock when it is drooped.
You should really also measure full compression (generally you'll just be able to do one side at a time). Then you should measure standard ride height.
From there you'll come to a compromise when order shocks basically. Too long a shock will not leave much compression at ride height, which may be limited by tire size anyway. Too short will result in the shocks topping out often and the springs trying to pull the shock apart.
For me, since I'm running 33" tall tires, I ordered shocks that are a little over 26" extended, pretty close to where the spring pack rests when it hangs. I may need to adjust my bump stops slightly to keep from bottoming out the shocks, but I'll gain around 1.5" of shock travel compared to the standard icons that ship out for tacomas. Less worry about tire rubbing or trimming, and more travel to keep the tires on the ground.
A lot of people will just use the normal shocks with a kit and run them with taller springs, and don't seem to notice or mine much. It's up to you. I'm just kind of picky and prefer things to be setup a specific way.
The bilsteins may be ok. They are digressive but not valved the same. I haven't had an issue with bilsteins too much in the rear, but the rebound dampening in IFS applications are not good. They do not catch the suspension on the down stroke at all. May not be as much of a deal in the rear. Beware that while the 5100s have a lifetime warranty, most of the "offroad" series like the 5150, 5160 or whatever have a short limited warranty. The 5100s like to blow seals, don't know about the others. I guess they are relatively cheap to replace if it happens though.
