First off, you can heal Stun Drain with First Aid just as easily as Physical, so the fact that the drain is converted to Physical is an important factor, not one that makes overcasting better still.
My group has used a bit of a compromise with this optional rule. I feel that the extra damage from net hits shouldn't just be "free damage", applying additional drain makes sense in that regard. As the rule states:
"Direct Combat spells involve channeling mana directly into a target as destructive and damaging energies rather than generating a damaging effect. Affecting the target’s being on this fundamental level with raw mana requires more focus and more power than producing basic effects"
It makes sense for more damage to mean more drain. But having the option to simply reduce your net hits used, sort of takes away from the risk of handling the raw power of magic. We are trying out a system where you can't choose exactly how many net hits you use, the caster can choose to withhold their hits from the test (without knowing how many hits the opponent has), but otherwise they don't know how many net hits they will have. To prevent the "my target just botched his roll and now I'm looking at a ridiculous amount of drain" problem, I will tell the spellcaster if the target has gotten less than half their hits. This lets them feel safe that they won't accidentally blow their own brains out, but also prevents them from making resisting drain a trivial matter compared to the damage they deal (by overcasting and then not using the net hits).
One of the other options I have brought up was using the Target's hits on the opposed test as an additional resistance test in addition to the opposed test. Meaning that their hits on their Willpower Test (natural mental resistance) to resist the spell also reduce the base damage of the spell. In this case, I would allow the spellcaster to knit-pick their net hits. This is an alternative to the method our group currently uses, not in addition. This rule would make Direct spells slightly less damaging, but give the spellcaster the greater control over their results.
Example:
The Magician Blaster attacks the ganger Flick with a Force 6 Stunbolt. Blaster has a Magic of 6 and a Spellcasting of 4 (Specialization Combat Spells) for a Dice pool of 12. He does pretty well on his Spellcasting Test, getting 5 hits. Flick, the unfortunate soul, only has a Willpower of 4, but he gets incredibly lucky, getting 2 hits on his Willpower Test.
Under the Default rules, no optional drain: Blaster is resisting Drain of 2 Stun, while Flick takes 9 Stun (and is barely standing).
With the Optional rule: Blaster could use up to his 3 net hits, increasing his drain and the damage by an equal amount. Drain would be 2+x, Damage dealt is 6+x. (where x is net hits used [0-3])
With House Rule A (blind test): Blaster feels that he did very well (his Player is told that his hits doubled that of his target), and has an idea of how many hits he could afford to drop to reduce drain. The end result is almost exactly like with the Optional Rule (in this particular example). If Flick had done slightly better, Blaster would not have known exactly how well his opponent had done and would risk failing the spell if he were to reduce his hits by too much.
With House Rule B (double resistance): Blaster could still use up to his 3 net hits, but the base damage is reduced. Drain would be 2+x, Damage dealt is 4+x.
Example 2 (Overcasting)
A few months later Blaster casts his Stunbolt at Force 10 against an enemy spellcaster, Crash. Blaster gets 7 hits on his Spellcasting test, while Crash gets 5 hits on his Willpower + Counterspelling test.
Base Rule: Drain = 4P, Damage = 12 Stun (that's enough to knock out a man with Willpower 8! While Blaster is looking at taking at most a -1 on further tests if he does poorly on Drain Resistance)
With Optional Rule: Drain = 4+X, Damage = 10+X. Where X is net hits used up to 2. (Still likely to knock out the enemy if he uses the net hits, but at least more likely to not fully resist the drain)
House Rule A: Same as with the Optional Rule, but player is more than likely going to use the full hits, rather than risk not hitting with the spell.
House Rule B: Drain = 4+X, Damage = 5+X.