Is it okay to tile above the short granite backsplash?

It is absolutely okay to tile above the existing back splash. If you're concerned it may be too busy, go with a neutral color, but add interest with texture and/or accent tiles. Have fun!

That really depends on your taste. Can you print a couple pics of the backsplash you want and tape it to the wall to see if you like it? Leave it up a couple days so that you see it in every light and also get an idea if it will start to annoy you or make you so very happy with your new look!

Im hoping for Happy!

:)

Mine is tiled above the granite backsplash, but it is plain white, so I agree, while it is perfectly normal to do that, go with something natural like a wood backsplash on the wall or a plain tile.

Choose a color that will blend without a pattern

Definitely take Kim's suggestion to try something out. Even if it's not the exact tile you have in mind, try to find something similar in color and texture and hang it up, look at it in all lights and move it around the kitchen. I have the same 4" lip over my countertop (with a very unbusy light HD laminate countertop) and the wall space from there to the bottom of my cabinets (to be painted white) is only 14-1/2", and this is in a small kitchen. Right now, the last thing I want to do is to clutter things up more with a backsplash so I'm leaning towards "no". It's a lot cheaper and a lot less work to test it out first. And you might even find that a change in wall color to harmonize with the granite might be all you need.

Yes but I would actually remove the short section and tile the entire thing.

Good question, I have the same and I was also thinking of taking down the existing short backsplash.