That lower piece is a spacer and cup all in one so that you don't swipe the tops off your forks in a crash. The lower measures about 18mm deep, so depending on your forks you may be able to take it out and fit a different headset with not such a big lower height and get away with it. If you've got Pikes then it's likely that you'll need to stick with the Cannondale part. Just get a new bottom bearing race – I think any FSA sealed cartridge will fit.
I seem to remember Dusty Lilac saying he had Fox Float 36 forks and a different headset to the OE one and it just cleared.
Here – http://www.singletrackworld.com/forum/topic/prophet-and-fork-crowns