They don't need 38 as a basking temp at all. They are more than happy with it around 33 - 35. Mine never bask close to the basking light where temperatures exceed 35. Most care sheets I have read state desert temperatures for water dragons and that is too hot. Mine stay active all winter when housed inside, it is almost impossible to get them to brumate, not that you want babies to brumate, just illustrating how tolerant they are of cooler temperatures.
TBH i used to have a pair and kept the heat up and heaps of humidity and had troubles..
down the track a few years i got a pair again, now i keep the bask spot about 32-34 depending on how long its been on and an ambient temp around 26-28. the water is a little cooler and they can go up their branch to get warmer and this pair have been thriving..
just how i do it.. I can post a snap of my viv if you like.
Very interesting points you both make regarding basking spots... Ill certainly be vigilant for any behavioral changes... To date though in my limited experience my dragon is eating & growing rapidly as well being very active & inquisitive. in recent weeks ive achieved milestones in taming the lil blighter as well...