The copper tubing should be inserted all the way to ensure proper mechanical alignment and resistance against bending. Otherwise, it can bend and the ferrule won't always seal properly and permanently.
The pipe dope contans a little oil that will cut down the friction between the nut and the ferrule. It usually isn't going to hurt if you don't get carried away. On the other hand, it is not a magic potion to fix a misaligned or overtorqued fitting.