No, you don't submerge jars when pressure canning. Most of the time, the recipe itself will tell you how many inches of water to have in the bottom of the canner. It's usually about 2 - 3 inches for vegetables that do not have a long processing time. The steam inside of the pressure canner is what is heated above the boiling point to kill the spores. Three things that I can think of that you did wrong. First, you have to let the canner vent for about 7 - 10 minutes at the beginning of canning before putting the weighted gauge on the petcock so that the air is released. Then, you put too much water in. You only need enough to make sure you have a sufficient amount to create the steam need for the entire process. (You were kind of combining water bath canning and pressure canning together, I guess... never heard of that.) Then, yes, the processing time includes the cool-down. Usually, I just turn off the burner and wait for the safety valve to open back up before attempting to even move the canner.
Good luck next time!
Life is too short to eat processed, artificially-colored, chemically-preserved, genetically-modified food. Or maybe that IS why life's too short.