Dead level or just slightly nose down is best. I towed for a year and a half with a v/6 Taco, and it was a good fit for our Pod. Although last week I saw a Pod pulled by a Tacoma that was a poster child for poor towing set up. His nose was severely down and the Pod was really giving his friction sway bar a workout. The Pod was dancing back and forth, and there was no wind and no semis passing.
As far as hobby horsing, your Pod will do that to some degree, as single axle trailers have that tendency. A WDH really helps limit this, and Tacomas allow this more than some, because they are lightly sprung in back unless equipped with the rear 4 leaf pack. Adding a helper spring and using a WDH really helped on my Tacoma. Hobby horsing is not really dangerous like sway, but is pretty irritating.