So your motor is on the transom and your cav plate is 2" above the keel.

I'm getting a custom 17" setback bracket made and I was going to install it so that the lowest height of the motor would put my cav plate about 2" above the keel now I'm thinking I should go more...

yeah, based on my setup I think you have some latitude to go up and inch or three. As you probably know prop design a big factor too so experimentation is key. Also, I would start high so if you have to patch holes in the transom most will be above the waterline :)