1-2 inches of waterline below basket is good. Should be fine because the whole point is to provide air by use of an air pump, not exposing the roots to surrounding air. However, I've read since ambient air has 20% oxygen and air pumped into water only delivers about 8% oxygen, it's actually better to expose roots to room air. I suspect this is why aeroponics works so well. With that method, your roots get sprayed with nute mix either from the side or trickle down from the top, the nute mix runs down the roots and pools at the bottom of the bucket where it's get pumped out and cycle around again. You use a water pump instead of an air pump. There are some great videos on youtube on how to build this and it really isn't much different. There should be a difference in plant growth however. I can't explain your low ppm being effective, unless the higher ppms that I'm used to reading about really isn't correct data. When you've got something that works, you should probably stick with it, but personally I can't wait to try an aero method. The reason why your plants won't drown in so much water is because you have adequate oxygen being pumped into the water. Doesn't have anything to do with how far the water level is below the netpot. I've read that the ideal hydro pH is more like 6.3. I doubt if you need to change your res. I'd use distilled water bought at the store which shouldn't have much ppm to it. This will give you a baseline of zero or close to it and a better idea of what your real ppm is. I think pretty much anywhere in 6's should be fine for pH. Grow them another 6 inches, then put into 12/12 light cycle. Raise ppm some using distilled water, so yes, a res change is in order if you used tap water. pH around 6.3. Should be good stuff. Gonna get stinky!