My ADA diffuser gets water in it also. It is not a problem the gas just bubbles through it. However, it does not clear completely from the unit, to clear it you need to tip it upside down when the gas pressure has got high enough, this clears it and keeps it clear. I think the problem you will have is the pressure is not high enough and the water will leak back in (since when the water goes out the pressure needs to build up higher since there is an decrease in pressure due to the volume of gas and liquid, you will see what i mean when you try it) To overcome this, i suggest turning it upside down, letting the water drain out, LEAVE it upside down and wait for the pressure to build back up again and bubble through. Then flip it the right way up and the pressure will be high enough to stop the water coming back in. lol, you’ll see what i mean when you have a go. BUT to be honest, it doesn’t matter if it has water in it, it just bubbles through, it just doesn’t look as neat.
Let me know, i still have reservations whether the yeast DIY system will produce enough pressure to expel the gas uniformly around the ceramic disk.
Good luck.
Regarding placement, it depends, you can try the CO2 mist and have it directly opposite your filter outlet, thus causing the bubbles of CO2 to be blown around your tank. Other than that you can shove it anywhere, as long as its bubbling CO2 will be dissolving. However, since you can not control the rate, you can not determine the CO2 concentration.
Chris