Even with the edge of that recessed face though, right? The inner lip should be even with the outer portion of the tube, but the outer portion of the seal should be pressed even with the inner recessed face. At least, that's the way I understand it, and that's how many others including 2001LC show it I think.
Not to get too hung up on precision of the seal install-but Ive found that variations in depth on these seals tend to cause leaks. I think the language "inner lip"- "outer lip" etc and related to "where" its seated gets a little confusing and can be misinterpreted. For me visual example is best- I posted an image a few posts back that one was almost a perfect example of what I am trying to describe. Look where the two arrows come together- those two edges where the top surface of the seal and the housing come together should be level with each other. Perfect would be where the seal sits a CH higher than the edge of the housing- a really thin CH- (as it relates to the image below).
IDK- its how I was taught- and it works. So YMMV. If you're removing an original seal- snap a picture before removing and use that as your benchmark.
If you want to confirm a precise install, find a seal on your truck (crank, cam, axle wherever) that is original from the factory you'll see the benchmark way to set the seal.
Heres an original cam seal-
Here's an original crank seal