The stem has about 8 inches without leaves. When I repot can I have this bare stem in the soil or would the stem rot.
Stems will rot with heavy soil that retain moisture, it would be possible to bury most plants in loose dry mulch and it would grow out of it. But if the soil was a heavy clay and wet, the plant could perish due to rot. So it really depends. Considering avocado seedlings love loose well drained soil, one could assume that is what you are using for your potting mix