Flat towing dingy height

The tow bar manufactures typically specify no more that 2-4" out of level, with the toad end low as the best choice when level cannot easily be achieved. If the toad end is high, there's a risk in a panic stop that toad could "pole vault" up into the back of the motorhome. If it's low, the toad will try to "submarine" under the motorhome, but because of the weight, can't lift it enough to do any harm. With a good working auxiliary brake application system though, the risk of either pole vaulting or submarining is very unlikely.

I've always read 3" was the max desired difference.

Blue Ox says level. The idea being they don't want the toad to dive under or over the hitch during hard braking.