Toilet flanges are made both ways, to go inside or outside. Outside alowes more of the pipe to be used. Leave the plumber 3/8" around the outside of the pipe. This will give the flange enough floor to rest on and enough floor to screw the flange on to. I would also have the plumber change as much of the CI (cast iron) pipe as he can to plastic. Have him go back to the stack if possible.