The higher the hitch the easier it is for the trailer to push the bike sideways or lift the rear wheel of the bike under braking.
With the high hitch you can generally only do one of turning and braking at a time. So if there's a problem and you need to swerve and brake to avoid it, you will end up lying on the road with a canoe on top of you. And a bicycle. And a trailer. And they will all still be moving.
The solution is to disconnect the rear brake of the bicycle and use that lever to operate the the trailer brake, but few people do that because it's not trivial and in practice it's not really necessary. Most people find that the "tow my canoe" rig is big, heavy and unwieldly, so they only actually tow for short distances on flat ground. That makes riding slowly and carefully quite practical, and often they can choose quiet streets as well.
One other option is a three or four wheel trailer which you could do as a rear dolly and a front, pivoting pair of wheels. Handling will be better than a central dolly if you can work out how to attach the front solidly to the canoe. Or have a spine to the trailer.
This question is much more important for touring trailers and work trailers, where the distances covered are greater and there are fewer opportunities to avoid bad roads. That means the consequences of a crash are more severe as well. But at the point where you're building a trailer with brakes and suspension (because there are 4 wheels) it becomes worthwhile modifying the towing vehicle as well. Most people start down that path and end up with with a trike as the load vehicle or the towing vehicle, or a quad bike. It's much simpler to build and ride a single vehicle than a trailer.
Answers like this Burning Man Trailer one deal with the general details of heavily loaded trailers. It's also worth mentioning Richard Guy Briggs and his canoe carrying tricycle