I suspect that each of us determines that "waterline" differently. In this case, for graphited epoxy, i look at it a bit differently. The reason I put this stuff on is to 1. Protect the hull, and 2. Provide a slippery surface to rocks, logs, concrete, & lilly pad-type weeds.
The geometry of the hull can be more important here than how high up it is. I stand back, cast a bloodshot eyeball upon the hull, and imagine it sliding along a sharply edged rock. Some parts of the hull can easily shed obstacles, and others are built to grab on to them. The parts that shed obstacles may not need to be graphited.
Others do it differently.