I'd put the outlet up high. what are you going to use as bio filter... plastic scrubbies, or bio-balls or.... what.
I'd put those in dry and then put the bottom of the hole abou 1/2 over the top of that level so your bio material is always covered.
Thats a good idea the more I think about it.
you could even rig a drip line coiled on top and put the hole down low, so the bio material has a max air exposure but always is wet.
Some do it that way and the bacteria grows faster/better/ thicker since it gets more air.
you would need to make a small spray bar or something.
thats getting to complicated really, just having a fresh water flow over the stuff continuously works fine for my setups.
Then again, it depends on the bio load you are trying to keep clean.
How big is the tank
How many fish are in it