Although my manual does say tow with engine down if at all possible, I sure can't do it with this kind of clearance...
I have also noticed that, when fully tilted up, the resulting relationship of engine block and leg to the hull means that any bouncing action is in line with the transom, pretty well centered directly over it. I would have thought this is a much better configuration than the levering action that must result with the entire weight of the engine hanging off the back in the down position.