I don't like to do this but I think it's time for me to spoil the party. I will try to be straight forward.
Raising the waterline is not a very good idea, although I understand why some of you do it: the aft part of the hull's topsides gets fouled, on the white or red line area. It is only the consequence of the crew loading the vessel too much, or too much aft.
If you raise that line, you will probably load your boat even more. This is not good. Not only for the boat speed (motoring or sailing) but also because it changes the original design, especially about the standing rigging.
How is a standing rigging designed on a sailing boat? It is mainly designed according to the boat's displacement (weight).
If you load your boat too much, the forces that the standing rigging will face (especially in bad weather and the boat is pounding in the waves) will be much more than what it is designed for.
When surveying boats, I sometimes see too much additional equipment or stuff.
On a Super Maramu (I choose this example as it is most represented on this forum) I sometimes see:
-davits or stainless steel arches with solar panels (400 to 600W), one or two wind generators
-diving tank compressor with 2, 3 or 4 (or more...) tanks
-additional fuel tanks and jerrycans
-additional bilge pumps
-big fuel polishing systems
-two dinghies with two outboard engines (one big, one small)
-lots of spare parts (but also lots of old used parts that have not been discarded)
-fully stuffed book shelves
-additional hard dodgers
-staysail with furler
-3 or 4 anchors and tackle
-too many old mooring lines, or old running rigging that was not discarded when replaced
-two RADAR aerials
The first Super Maramus were designed with 5 100Ah batteries, a 80hp engine, a two cylinder 4kW generator, optionnal A/C, 60 liter 24V water-maker, small washing machine, no davits, no arches.
The recommended load of the equipment and crew was 2500 kg (not including fuel and water).
The last Super Maramus, with their 13 batteries, bigger generator and engine, bigger bow fitting, standard 3 A/Cs (sometimes 4, ask Joel...), 100 or 150 liter water-maker,
etc, allowed only 2000 kg.
With these loads, the original waterline was good.
If on your SM, the waterline is not good anymore, this simply means that it is overloaded, which can be sometimes dangerous.
Before thinking of raising your waterline, try to estimate the weight of the additional equipment that is on board. The best way is to empty your boat from all the non-fixed equipments. You'll be surprised of the amount of material that you will put on the dock!
Then, try to estimate the weight of the fixed equipments (arches, solar panels, diving compressor, extra pumps and fuel systems).
If you find it above 2000 kg (for the SM2000), then you should discard some of these items (books are very heavy and damaged alternators or 10 sets of zincs-I swear I sometimes see this- are not necessary).
You can also decide to sail with only half the water tank if you have a good water-maker, which will give you 500 kg possibility.
Also don't forget to balance your load. On a SM2000, the additional standard equipments are located rather aft (engine, generator, batteries, etc..). So, don't forget to load the front cabin (what I usually see, strangely, is that the front cabin is very empty, compared to the cockpit and aft deck lockers).
Keeping your boat light will make you happy (and faster).