As Alan states he runs the prop shaft level with the bottom. AS I understand his meaning that is not the same as the prop shaft center height at the bottom.
Consider cutting the transom to several 1/8" shims below your target height to allow for adjustment for different props and setup. Note that the prop shaft center is below the gear case front point of the casting (also true of the old Quicki A/B/C/D gear cases). So if you want the prop shaft center at the bottom that front point is above the bottom. See the pic of the 25xs in this link:
http://www.screamandfly.com/showthre...utboard-racing
Even though you are not racing the boat in present APBA rules the 25SSH class hydros are limited to run the rear prop shaft center no higher than 1/2" below the bottom, but there is no rule restricting the angle of the prop shaft relative to the bottom. I would run the prop shaft level with the bottom and the rear center of the prop shaft no higher than 1/2" below the bottom as a safe location. You will determine by testing if you want to change the setting based on conditions, props, etc.
Be careful with this engine properly set up a hydro will run over 70 mph.