On my bike there is a loop on the bike frame right above the dropouts (where the wheel axle is bolted into the frame. However, on the rack you have, you could use the bottom of the rack struts where they flare out. I always spin the hook a few times so the cord is twisted like a bag tie, to make it tighter, because otherwise the pannier can bounce off the rack when you go over a bump. On one panier I actually knotted the cord to shorten it. That ring in the webbing near the hook may also be intended for the cord to go through it, to lessen the pannier swinging out too much.
Mount the pannier as far back on the rack as you can to avoid heel contact. You can also use those adjustable chrome straps on the rack to move the whole rack as far back as you can and the mounting bolts on the bottom of the rack can be screwed out a bit to also move the rack up.
Last edited by cooker; 06-17-11 at 08:19 PM.