I measure the height of the cake tier in the middle of the tier, then I cut all my dowels to that height. Now, if you are not able to get your cake tiers level when iced, then get eye level with the top the tier. Find the highest point and measure there. That should be the height all dowels are cut to.
If you base the length off the shorest dowel (or lowest point on the iced tier) the tier on top will sink a little into the tier below causing a bulge to form.