Brian, 2" - 3" from the bottom is what I do. IMO, it allows some air under the firebasket for better circulation. I also use long (4" pipe nipples so the grate and/or firebasket will rest on them...up off the bottom of the barrel. Hope that helps, but check other posts for ideas as well.
my avatar swiped fatties from the plate....look how sorry he is.
NB Bandera with mods
Weber 22 .5" x 2, 26.75" x 1
UDS x 3
Created "The Great Spam Revelation of 2011."