I know that a LFS here in St. Louis has some of the LR above the water. However, if this was my tank, I would have 100% of it submerged 24/7. Bacteria not only live ON it they also live IN it. IMO your waterflow will bring sufficient Oxygen and unlike what you have likely read, the submerged bio-balls can provide denitrification. However, LR is definately more effective. The biofilm that bacteria create ON the LR is actually thick enough for anaerobic bacteria to do their thing....it just might not be enough if your bioload is too high or your maintenance practices are too low.
You should do what you want...I'm just telling you what I would do.