I have a frame with 126mm spacing and the suzue hubs on the wheels I bought came with an axle that's a bit too short. There are about 8 threads exposed beyond the dropout. The nuts thread about half way on on both sides. Should I swap the axle out for a bigger one or am I ok?

I'd guess that you're not comfortable with it. Change it for peace of mind. Not hard at all to do. It probably would work OK as-is, but peace of mind is worth something.

Replace it. Did you crunch the frame down to 120, or did you space out the hub before installing? If you didn't respace, this would be a good time to do that. Bring the whole thing into the LBS, and they should have everything for you if you need help...

That's because Suzue hubs are track hubs, and track bikes have 120mm dropouts. If youd bought the hubs from Harris Cyclery, Sheldon would've asked you what you were using it on, and he would've told you that you needed the longer axle.
To make a long story short, you need the longer axle.