this is a good question, and people will have many "OPINIONS".
The way I see it , None would be better, but I have seen alot of boats with 3 to 4 inches of prop inside the transom. They do Okay, ride rather well. A while back, I think "HGM"s dad had some new metal work done and the Prop went way to deep into the boat. I believe he said the boat did not handle to well.
Look at a full deck boat. one with a 9 to 12 inch transom. The motor is set low and the thrust pushes the the hull across the water and ground. Close to Parallel.
Now look at a boat with 23 inches in the stern, If the motor is set high for the big prop and the prop tips clear the transom. You most likely are going to feel torque roll, but the driving force3 may push the bow down and the boat may want to plow on the nose.
But if you set the prop do deep ,then the back inside of transom will act like a wind sock. You have alot of wind blowing the stern of the boat backwards, and the top of the prop pushing the bow forward and down.
You will just have to make adjustment to get it the best you can.
This is why I personally like the full deck boats, You can keep the engine lower, Which gives you better action with the running surface. You don't have to worry about things coming into the boat, water and grass. It's easy to clean.
What is the magic distant? It all depends on the entire boat and the weather that day.
Oh, No offense to you tub boat guys. Just Chillen and Killen some time.