Thank you for putting my mind at ease. I have seen far too many kids bedrooms in a cellar with small windows about 5' off the floor!
Now, you might be able to get away with sanding this lip but, you may have to chip it back aways before you start the sanding to feather it out.
Just make sure it will not be a tripping hazard.
Question* what type of flooring are you goin to have in this finished basement?
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