I set the plug (or rockwool) a little higher than the flood level. I don't want the plug getting saturated everytime a flood is performed. During the first week from seed, I manually moisten the plug until I am sure there are ample roots under the plug. Once the plants get a good set of roots (after about a week), I think it's best to keep the plug dry. I think a wet plug is potential for a problem such as mold or stem rot.