Prop position = prop transom lift leverage?

[LibertyMKiii]

Hi all,

I am still a beginner with boating and looking to learn from those more experienced.
After playing with a 25 degree rake prop I am getting a feel for what transom lift is and general adjustments to various setups. My new build is a 1886 Aeromarine cat (42.75").

I have seen my Aeromarine cat setup with the prop under the transom and others with the prop extended several inches beyond the transom.
My assumption is that you want the spray off the prop to not be blocked in any way... so beyond the transom might be ideal?

I am trying to understand the impact of placing the prop further back, I believe doing so gives the "lift" more arm leverage? Am I thinking about this the right way?

Attached is a simple drawing to illustrate the 2 setups.