abs closet flange is 1 and half inch lower than floor. the flange inlet is ID 4 inches. I am thinking of use some abs cement to glue a new abs flange into the existing one. (I assume 4x3 flange can go fit snugly into a 4 inch inlet?) I did some google search but have not found anyone recommending doing this. Would it work?
Usually if the flange is not high enough, a larger wax ring is used or stack two wax rings together. Yours sounds like it is lower than any I have ever encountered. A good plumber with an internal pipe cutter could cut it with out damaging the floor, add a coupler, and with some proper material to hold the flange at the right height, reset a new flange. Seal that to the surrounding finished floor, so if the wax ring DOES leak, it will show on the floor, not go down around the pipe.
You probably wanted something like what's pictured below. It's made for cast iron pipe. You drop it into the old pipe and tighten the internal screws to expand a rubber gasket. This would guarantee a proper seal:
How you get the required mounting screws to work is up to you. A plumber will have an internal pipe cutter, and she could cut the pipe, remove the old flange and drop one of these bad boys in its place.