Ditto on packing the tarp at the top, or in pocket to pull out first and setup a dry area. Speaking of which, it should remain dry under the tarp, including "splattering of mud, runoff, etc." and if not, you're hanging in the wrong location. Be wary of hanging in former tent spots that are susceptible to that sort of thing. Look to hang over forest duff. If you've ever had the opportunity to be in the forest during a heavy rainstorm, its amazing to watch all that water come down and be simply absorbed by the earth, with no runoff to speak of except for the trail. I also use Tyvek to put the pack on instead of directly on the ground.
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