Adam,
raising the boom would have the effect of raising the center of gravity of the weight aloft as well as raising the center of effort. Both would in effect make the boat heel more with the same wind. In addition, the wind is always a bit stronger the higher you go, further adding to this effect.
If you then have your guests stand up, you've done about the maximum you can do to make your boat less stable.
That said, I haven't seen the need to try this. It depends on what precisely you mean by a "windy day", and how many guest you have on board -- I've found that with a few additional bodies, I can sail in more wind without having to move about the boat so much. No hiking, and there's a wider range of winds where nobody needs to switch sides. And that was without a reef. With a reef, the range of conditions would get wider.
Finally, the Daysailer boom is fairly high. I often sail with inexperienced crew or novices and none have gotten in the way of the boom yet. And I certainly don't encourage them to stand up.