How far can I move ceiling joists up?
OK, lets start by correcting some terms. The structural members you want to raise are not rafters, they are ceiling joists. You are right that because you have balloon framed walls, that has no effect on the top layer of ceiling joists. Changing these joists have no effect on the balloon framed walls.
The thing you have to determine is if the ceiling joists are tied to a load bearing partition somewhere near the center of the house. If you have full roof rafters with a ridge board, it is very unlikely that the ceiling joists are tied into any down supporting bearing wall. Raising them should not be a problem if you plan for support of these joists if there is any center resting point,  via a knee wall on the center resting support.  If these joists span the entire width of the structure, then you can safely shorten them and reconnect them to the roof rafters.  They serve two purposes. First a ceiling joist, and second, a collar tie for the roof rafter. I think you will be fine, however, I'd love to see some pics of the attic area with the joists.   Good luck.