I would put the top of the hole just an inch or so under the waterline. The less pressure on a potential thru hull failure, the better, in my book. Unlike some others, it does not need to be submerged while heeled, so you don't need it down low.
These are generally connected to the below waterline outlet. To exit the pumpout fitting (assuming these pumps can lift that far) would require a hose to go overboard to the water anyway. A connection that might not work perfectly on a rolling boat beyond the no discharge limits. Yuk.Another option would be a system to pump the tank while at sea via the deck pump out fitting what boat is it and what is the current head and tank installation here are a couple ideas that would in my opinion be better than a hole in the boat Amazon.com : Sea Flo 12v Macerator Water Waste Pump 45 LPM 12gpm Toilet Rv Trailer Camper Marine Boat : Sports & Outdoors also adapt to deck waste pump out fitting
Pretty sure I visualized exactly what you are thinking. I've seen plenty of dock side connections have difficulty, when the boat is not moving. I still think that's a risk. Then, what are you going to do with the contaminated hose, when you're finished? Yuk.I should make a unit like I am thinking and patent it in my mind it will work great however most people have a hard time visualising my ideas think a hose screwing into the deck fitting then twist locking to the pump and a fixed 5 foot discharge hose with a weighted end to keep it pointed down and use it to pump the tanks when needed not every time you use the head