If you've got a million HP then you may be forced to run an extended swingarm.
When you extend the swingarm you are giving up traction. For a typical YFZ or 450R lowering is the ticket --- if you extend the swingarm you will have far less traction than the guy that lowered his.
The trick is finding the combo that works for your power level. If you're talking a 200hp snowmobile powered Banshee - it's likely you will have to extend the swingarm and just take the traction loss in exchange for keeping the front from pulling an uncontrollable wheelie.
To think about it correctly you have to think about where the weight is. When you move the rear tires back, more weight is biased onto the front end (which is one of the reasons it's less likely to wheelie).
In some applications, where traction is a premium, like sand drags, this obviously becomes less of an issue and you'll see a lot more extended swingarms.
Traction is also one reason TT quads sometimes use shortened swingarms.
Your analogy about top fuel dragsters is partially correct - however, if you notice they are not constructed like a quad. All the weight is over the rear tires (on a quad, when you extend the swingarm, the rear tires move away from the weight). The vehicle is long which gives it stability. The length also adds weight and leverage to the front end which helps keep it down.