The lower level is preferred, but I haven't found it mandatory,
Ran an inline Carter pump on my Hemi RR, feeding 1/2" line, for decades.
I used it to pre-fill the AFBs, ran the mech pump only most of the time while driving.

A Holley blue was on my Duster when I got it and it was above tank level; ran it like that for awhile.
Later on when it hit the mid-10s, I added a sump & moved the pump to the rear crossmember; it also had 1/2" line.