I haven't been at this a long time but I'm with Cal - I do a lot of jerky (anywhere between 3-5 lbs a run) and I set at 165. Yeah my old SM008 also likes to peak up a bit at first, but it levels out. I'm reading the smoker temp with a Maverick 73 and I get great results. I dump the moisture about every hour - and when I do the temp drops, then goes up and then stabilizes.
Good luck, keep plugging away at it - I find the more I "practice" the better the product gets.