That Sheldon Brown article is a great start. In general, my theory goes that you just need to keep tweaking things until it feels right to you.

Going down to a smaller frame to raise your saddle seems like it wouldn't be comfortable. I like my saddle high and my drops low because I feel like I can stretch out a bit when I go to my drops and I like that. If you go for a smaller frame size your arms will always feel too cramped IMO.