Removed toilet that leaked at base. Noticed that plastic mounting flange ibottom is 1/4 in above finished floor making top of flange about 5/8 aove finished floor. Is this why it eventuaslly leaked or is this no problem?

Depends on the length of the outlet horn from the toilet and whether it is hitting the floor flange. I've seen many toilets with the flange 1/2" above the floor and the wax ring works fine. You might try to clean out around the ring and put a padded 2X4 on the flange and CAREFULLY tap it with a hammer. If it goes down a little bit, retighten the flange screws and it should be OK. Some times there is a little play in the drains, particularly with PVC. I assume PVC because you mentioned a plastic flange. Hope this helps.