You're seeing great progress in the past week, Jennifer, so I'd be reluctant to back away on the dose too much. Technically, you wouldn't even reduce tonight because you just reduced this morning, but I think it's ok to reduce because of the 30's.
I think one reasonable option would be to give a significantly reduced dose tonight, though, say 1.0u, and then return to the 2.75u in the morning.
The "shed" or "depot" means that the Lantus forms a precipate in the body that is equivalent to the dose. That means a depot at 10u is larger than the depot at 3.0u. When you reduce the dose, the depot will also reduce, so as you go down the dosing scale, the depot will equalize to the size of the new dose, but there is a lag in time for that to happen. Reducing the dose this morning didn't prevent you from having the 38 today, because the 3.0u dose's depot hadn't reduced in size yet.
Think of it as a bit of being time-delayed. The 3.0u dose can still be influencing Doodle's blood sugar for the next 6 cycles - probably less and less as you get farther away from the 3.0u.
This is the reason that if you're having a run of lower numbers and you reduce the dose by 0.25u, you can still have the low numbers continue on into the next cycle. If you want to interrupt a run of low numbers for some reason, like you're exhausted and you must sleep, you have to significantly reduce the dose for one shot.
There's a great explanation of how Lantus & Lev work in the body
here. It's worth reading to help you understand it a little better.
You must be pretty excited to have Doodle go all green like this! It's a great sign!