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That is a good simple idea. One extra thing I'd do is put some kind of a plastic coating on the finishing nail to prevent it from nicking your rod guide.
Ditto!
If you would put a small weight weight on the end of the dowel and the line going straight down to the water then the fish pulling on the line would make the rod tip drop down and the dowel with weight attached would drop towards the ground therefore eliminating the slack line.