My goodness if you had the probe sitting directly in the air stream of heat coming right off the fire at the edge of the waterpan you must have pegged the needle on your thermometer.
One unique thing about the temperatures on the bottom shelf that is different from any other level is there are radical temperature extremes. The air flowing around the waterpan is much hotter than the air inside the rest of the chamber until it has mixed and the heat is distributed conventionally. But the air directly over the waterpan is cooler than other areas in the smoke especially at the beginning of the cook when the water is cool.
By locating the thermometer at "grate level" it also means, as close as possible to where the food is cooking. All smokers and grills have HOT and COLD spots, meaning that the temperature varies across the grate. The Chargriller for example, has a hot spot near the firebox and it is much cooler at the exhaust end (on the left). Having one thermometer at the opposite end from where you are cooking would do little good even if it is mounted at grate level.
Similarly in vertical smokers there is temperature variance from top to bottom. Heat rises, so in most empty smokers the top shelf can be a lot warmer than the bottom…. But depending on the amount of cold steel, water, and meat in the smoker and its placement, the mass can cool the air as it passes over and around which will leave the top shelf cooler than the bottom. Once everything warms the temperature difference can invert.
This is why I feel it is important to have the temperature gauge placement at grate level near the food being cooked, so you have an accurate reading. Just like you didn’t get the expected results with your gauge placed in its most recent position, a gauge located in the lid will read incorrectly for the same reason.
If a long stemmed gauge were used as Roger suggested, I believe it should be shielded to prevent conducted heat along the stem from affecting the reading.