I've heard buddha and others say "You set the fuel level at the same height as the gasket of the float bowl".
With the recommend float height of 13mm - needle valve closed and float tang just touching (not compressing) the valve spring - the fuel level is much higher than the gasket surface.
Setting the float height at 18-19mm I got the wanted (per wiki) level.

Is my setup toasted?
Has anyone measured the fuel level after correctly setting the float height?

i myself dont use the gas in tube way of setting.  Never have never will.  I set it by eye.  never have a problem with it either.  holding the carb in hand as it would be on the bike with bowl off lift float with a fingure until you feel it seat.  alot of times youll be able to see on the float where the gas line is usually at.  if the float is way up or way down adjust it a bit and see where its at when you let it open and then closing it again.  if your not sure if your getting it closed blow in the fuel in port on the carb if you can blow through it your not closing it.

I also found that setting the floats by the procedure in the manual caused high fuel level.

You said 13 mm, my manual says 14.6, but i set it by eye anyway, so couldnt tell ya where its at, just that i know my manny says 14.6mm + - 1mm

Yeap gregvhen, you probably have the old style carb.

The newer ones need (per manual) a 13mm float height.
(I also found the DRZ400 and XF650 uses the same type of carb, in a different diameter, and their manuals also state a height of 13mm)