2.5:

I agree with pmc on this. The stick from a 722.323 ('86 560 SEL/SEC) has hot low and high marks located at 1.125" & 1.75" respectively, from the bottom end, which is curled into a ring. Irrespective of the overall length (26.75" for the .323) I consider the distance of marks from the bottom end to be definitive, as the overall length will vary with the length of the tube, whereas the position of the bottom end of the stick is held constant.
If the hot fluid level is above the lower wavy section, as you state, the level is way too high.