Blue Ox says that anything from level to 4" down is OK. Tow bar should never go UP to the toad.
Also, the tow bar sticks out because it's designed to give you clearance to fold it up (and then to the side). Some motorhomes have the tow receiver recessed a bit under the end cap, so they designed it to stick out. No need to drill another hole.
2008 King Aire 4562, Spartan K3(GT) w/ Cummins ISX 600
2014 Jeep Grand Cherokee Overland 5.7L V8 Hemi w/ Blue Ox Aventa LX Tow Bar and baseplate, SMI Air Force One brake