Cedar beveled siding does not seem to be overlapped and nailed properly

Until I decided to replace a couple of ~16-inch long, beveled-siding from exterior I have never given thought on the width of the exposed face. On my house, the exposed face of the cedar siding measures 4". When I removed the old pieces, I noticed that they are 5-1/2" wide (actual size.) My replacement pieces were also 5-1/2" wide. This means that overlap between the beveled pieces are 1-1/2". And the nails were put ¾" to 1" above the bottom of the planks. This means that nail goes through the overlapping piece under, and most likely cracks it.

At the beginning I did not make anything of it, since I had no clue. However, when I did Google search, I have realized that every website recommends that nails should not go through the bottom piece but slightly over it. Now, with the current overlap size of 1-1/2" and where the nails are put, that is not possible. I have big house and all the exposed faces measure 4" or slightly narrower to 3-3/4". The house is 30 years old.

I am wondering if the builders did it wrong from the beginning, or installation instructions changed in the past 30 years. I have some other cracked beveled siding which are as long as 14 ft long. I just wanted to get an opinion before I start my repairs. Should I overlap them as it’s (ignore if it cracks) or should I cut the siding to a narrower size so that nail does not pierce the plank underneath. Or Should I put the nails slightly higher than 1-1/2 inch from the bottom of the plank, to avoid the the plank under. Thank you.