That hole looks high to me. The normal design has it about an inch below the top of whatever you are using to make the reservoir void, 4" drainage pipe in your case. That would put it about 3" above the bottom of the bucket measured from the inside.A light was lowered down into the bucket so that the soil level could easily be seen. A 3/8 inch hole was drilled 1 inch below the top of the soil so as to set the air gap.
This is done so that there is an air gap always present even when fully watered. Your hole looks higher than 3", but hard to tell. If it is, you won't get the air gap until the plants drink enough to lower the water level to that point and you'll see it in droopy, overwatered looking plants.
Looking forward to the grow!
Oh, and welcome to the SIP club!