the lower the prop in the water the better the handleing, but the slower you go.
depending on boat and gearbox IMO i would run with the propshaft between 3" and 4" below the transom, this should give you the best of both worlds. however i think you should try it 4" below first using the top engine hole so as you have lots of adjustment and if it handles ok raise it up a hole and try again.
keep going until you find it doesn't handle or you loose water pressure and this will be your optimum.
there are lots of ways to then improve ie. setback plates and low water pickups but try this first
I run with the prop shaft between level and 3" below depending on water conditions and what i'm trying to do however i have a hydraulic lift and always pull away with the engine at the lowest height and then raise it once on the plane to limit prop slip.
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