being limited to only refering to the extract means that everyone is on an equal footing --> theorectically then it doesnt matter whether or not you have read the whole book or not, there is no advantage/disadvantage either way. however, if you have resad the book and choose that extract you are advantaged by a better comprehension of the themes and symbols etc. being employed. for example, it is far easier to understand the allegory in Willows if you have read the whole book. also, it makes each text relatively equal --> otherwaise how do you compare between an entire novel and a book cover?
anyway, having already completed the hsc, believe me its a lot easier with only a short extract because you have the opportunity to show the depth of your knowledge in the limited time rather than having to deal only superficially with a large number of points.