Ideally the damper should be right at the outlet, but for safety sake you can put it anywhere...I suggested 1' above....interesting about a 3" pipe with a damper...its not really needed as it will build up excessive amounts of creosote due to the pipe being cool as it exits the stove...what I would suggest from past experience is leave it wide open....and every couple of weeks, remove the pipe from the stove and give it a good shaking on shore...a 3 inch pipe has enough draft without a damper.....and just enough to stop excessive smoke back when you open the door to stoke the stove...Grumps 2bits for what its worth