OK. I don't have a dropmember yet so I haven't installed or seen one in person BUT I have talked to Nathan quite a bit about it and asked the same questions.
This is how I understand it:
With drop spindles your ride height will be 5" - he decided on this height because that's how high it needed to be to clear some monster speed bump in his parking lot.
With a 2wd frame and stock spindles, the ride height (half way inflated) will be about 7"-7 1/2".
If any of this is wrong, I'm sure Nathan will chime in and tell you but I'm pretty sure this info is correct.
I'm sorry, I forgot about tire size again!!
All the above assumes a 29" tall tire. I'm planning on using a 275/45x20 which is 29.7", so my frame would be 3/4" off the ground. A shorter tire would theoretically be "in the ground" - that's how Nathan expalined it anyway.