Seems like it is too large for the compound, but the real question is, can the tools be set to the center-line? If you can't then it is too big.
Edit: It's possible it could fit, but getting to center-line is the acid test. On my Grizzly G0752Z, a 10x22 lathe, some AXA tool holders cannot get to center-line with a 1/2" tool. I suspect that on a mini-lathe class machine, and an AXA, one will be limited to 3/8" and under tooling just to get on center. Maybe even 1/4". If that is the case, it is probably better to get an OXA set. OXA will handle 3/8" no issue.
The key thing is to measure (with precision) the height from the top of compound to the center-line of the lathe. This can be measured, with the help of a micrometer, a 123 block and some shims. Chuck up a rod, and lightly turn it so it is concentric with the spindle. Remove your tool post, and stack a 123 block and whatever shims you have to fill the distance from the compound to the bottom of the rod. Measure the rod diameter with your micrometer. Measure the shims and the 123 block that were used to fill the gap. The total distance is the 1/2 the diameter of the rod + the sum of the shims + 123 block. You can easily look up the range of operation for OXA and AXA tooling. Hopefully, you are within the range of an AXA tool post.
If you can't hit center-line your lathe won't operate correctly. You will get poor results.