The 2x4 was notched to fit into the stake pockets, so the uprights can’t go any lower, the lag screw was so they couldnt be lifted out. With all of the handrail connected there is so much friction the lag wasn’t really needed. I thought it might help with stability in the rail, but I need to stuff a shim in the upper pocket.
The lag only goes into the wood, not through into the channel.