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The principle of raised outboard motor operating height to e.g., "two holes up" on your Boston Whaler 16 custom hull is to improve overall performance. This means you will have less draft, reduced drag, improved time to plane, reduced steering torque and effort, and overall improved speed and fuel economy.

There may be other issues with your hull that could be causing poor performance, i.e., porpoising. I noticed in your posted photographs that the below the water brass drain tube on the exterior of the hull is failed. There is no lip shown in photograph. You may have seepage of water into your transom core, and, as a result, you are running "transom heavy." Have you weighed your boat? The bare hull factory weight of a 16 was at 500 lbs.