>>I'm preparing to build a 3 tier sliding bypass display set up. I've researched the heck out of thermostats but still can not justify spending $100 on a proportional.
But think how much you'll be spending just on the caging, not to mention the animals you'll be putting in those cages.
>>BUT if I did, would you simply place the probe in the anticipated warmest part of the middle cage?
Yes. That's a reasonable plan. You'll be splitting the difference of your bottom cage being a little too cool and the top one being a bit too warm, with the middle one being JUST right. Of course, depending on how much your ambient temperatures vary from ceiling to floor, perhaps you'd want to purchase THREE thermostats - one for each cage. Okay, I guess that's unlikely based on what you said. 
>>Is the alternative on/off style good enough to drop temps with accuracy when breeding snakes?
Absolutely.
>> I even thought about a rheostat and just get a temp gun and tweak it manually until you reach desired temps. Your input is appreciated!
Well, you can't beat the price of a rheostat, that's for sure. But if you have, indeed, researched the heck out of thermostats, you probably already have a pretty clear idea of the various advantages of a quality on/off thermostat or of a proportional one versus a basic rheostat.
I've used Helix, Big Apple, Herpstat and one other proportional model over the years; they've all performed adequately. For what it's worth, a Helix one is the only one of 21 different proportionals which has failed - so far. If I were starting from scratch today, I'd buy Herpstat.
By the way, you should consider buying that temp gun in addition to a proportional thermostat (as long as I'm spending your money for you). They are cool husbandry tools. I use mine every day.