Yes, in this situation it would be appropriate to reduce your withholding to make up the difference. The purpose of the W-4 is to withhold the correct amount.
The instructions to the W-4 say:
"Complete Form W-4 so that your employer can withhold the correct federal income tax from your pay. If too little is withheld, you will generally owe tax when you file your tax return and may owe a penalty. If too much is withheld, you will generally be due a refund. Complete a new Form W-4 when changes to your personal or financial situation would change the entries on the form."
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