[willy]

K I am a little confused, you actually went below that " ideal " three inch area and are still having a problem. Are you sure you are measuring a straight line off the hull along the keel and measuring to the ventilation plate. Something does not sound right.
Is your D&D bracket hollow and provide flotation. If so you can do a couple of things. One temporary to see if weight distibution is the culprit, put bags of sand inside it and add weight on the end of that fulcrum and see what it does for performance. The other thing which I was going to do if I was unable to lower the engine was to use that hollow container as a water tank, 8lbs per gallon, maybe 12-15 gallons. I would open the top and fill it by bucket on the water close the top and run it and see what improvement you get. When you come out unscrew the bottom drain plug and let it out. If it works you can arrange a better set up. That is assuming your bracket does not have a access hole into the transom inside there, mine does not, solid wall.