If you are referring to a slight bulge a bit more than 1/8" above the rim, this is absolutely normal. This is where the solid head of the case transitions to the sidewall; the solid head can't expand, while the sidewall will. Nothing to do with headspace. A backed out primer could indicate excess headspace, but to really check you need gauges. Some folks will use shimstock on a casehead, and this can give an indication if headspace is excessive.
If there is a frosted ring in the expansion area, this can indicate an incipient separation, which indicates excess headspace. Section a few caseheads with a hacksaw, and smooth the cut surface with a file. If a separation is starting, you'll see it as a groove running around the inside of the case. As has been pointed out, excess headspace in a No. 4 can be reduced by installing a longer bolthead.
A .303 rim is about .060" thick. Military headspace gauges are .064" and .074". If a rifle gauged toward the upper limit, it was considered serviceable, even though cases might show signs of incipient separation. The military weren't planning on reloading, and loose tolerances helped reliability under service conditions. It is not unusual to see cases showing incipient separations in issue rifles. For civilian use tighter headspace is preferable.