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Overcast Stitch? Answered

HOLY CROW thank you so much for these lessons! I'm following your Superhero Costume lesson right now and it's been a GODSEND! No one else has made such an instruction/tutorial and without you, I'd truly be lost and out of luck. My cosplay hopes dashed. THANK YOU!
My question is about the overcast stitch. I am on an old Elna SU, that uses special cams for specialized stitches. It has an overcasting + multistretch stitch but here's my issue: It's meant to enclose the raw edge. This causes problems because obviously no stitch I got will enclose the edge AND a 3/8" seam allowance. I'd rather not go mucking about on the seam allowance because that'll just be adding more work than I need. But in this lesson, you showed an overcast/knit stitch that did NOT enclose the raw edge!! Is this possible? Is that allowable, will these stitches still work without the need for enclosing the raw edge? It won't muck anything up? I can't seem to find the answer to this frustrating dilemma and if I can get around the slight puckering of the zig-zag after the fabric is stretched (and we all know you can't iron spandex because it loses it's elasticity, grrr) I'm gonna take it! I hope you can shed your expertise and I'm recommending your lessons to everyone I know in cosplay!