You want some room to move around in your hammock and the sleeping bag around you will prevent that. You also won't have enough room to lie on the diagonal in turn making you sleep in a banana-like position which isn't comfortable at all. Yes, it reduces weight to do the mod but it's also more practical. On the other hand, people use a system called a Pod which completely surrounds the hammock but it is large enough to accommodate the occupant moving around and sleeping diagonally.
Enjoy the elevation