So I suppose that short stubby cheapo anode being 2 feet from the bottom of the tank might have somehting to do with the bottom rusting? My thinking was that the galvanized pipe opening is about 5 inches from the top of the anode, so there might be an effect extending some distance into the pipe. Now that you mention it, the metal ring contacting the water where the pipe screws into the tank would terminate any electrical potential generated by the anode and prevent any protective effect from penetrating very far into the pipe. Electricity likes shortest distances. Plastic insulated galvanized nipples with a few wraps of teflon tape extending slightly past the end of the pipe to prevent any water from penetrating into the pipe threads sounds like a good way to deal with a brass valve on iron pipe, or maybe pipe dope applied just right. I would bet that ANY water penetrating into the brass/iron pipe threads, even one turn, would be enough to start some pretty good corrosion. If water is completely excluded from the threads and the barrel of the nipple, the only the very tip of the nipple will corrode. Dang, plumbing kinda makes my brain hurt.