While rotating the axle on it's center does allow for more correction without objects colliding like tierods on arms, it does have it's limitations. The problem comes at the rear of the bracket on the axle. Eventually you will rotate the axle to where the socket on the arm that holds the bushing will hit the ceiling of the bracket. I estimate this to be around 9* possibly 10* from looking at my truck.
There are two factors that determine how much you can rotate the axle using the stock arms and axle brackets before running into tie rod-arm interference, but neither of them is rotating around the center of the axle.
1. The closer the rotation point is rearward to the tie rod, the more you can rotate the axle before you have interference. This is just simple geometry. If you rotate around the axle center, you get an intermediate amount of correction before you hit compared to rotating around the front or rear axle bracket bolt.
2. If you move the attachment points down on the axle bracket away from the axle, you will increase the distance between the tie rod and the arm, thus increasing the amount of rotation before the tie rod hits the arm. This makes it possible to rotate the axle more degrees before you have tie rod interference.
Why you get less caster correction than the amount you rotate the axle is an interesting question. The amount of rake or stinkbug is an obvious factor and it is directly related to axle rotation. Another possibility is that the caster angle is less than the axle rotation angle because it is reduced by the king pin inclination angle (the fact that the steering plane is angled inward at the top toward the center of the car, and not perfectly vertical). This would reduce the total angle by the cosine of the king pin inclination angle, but this would be a small number, like a 1-2 percent and not something like 25%.
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