It could be she started hitting the rails because she was starting to tire if you had jumped her over other fences.
Height can be hard to judge. It is going to depend upon the horse's ability and level of fitness. If yoo have only been jumping 3' I would build height slowly in order to make sure Sheena is fit for the next level. I think you are right though in that eventually, you are going to hit a height that she consistently drops..in which case the height one level lower is going to be your maximum.
At the age of 12 she probably still has a lot of jump time in her but as she ages you may want to limit your higher jumping; while not necessarily cutting down the height but cutting down on how often. Obviously there will come a point in time where you have to drop the height due to age, condition, joint stress etc.