That's a valid quick-adjust way to do it, too. Heel right on the pedal center, full leg extension, but not so high you would be forced to rock your hips just to reach the pedal. Then, when you pedal correctly near the ball of your foot, the extra length added by the foot puts just enough bend in your knee.

I've been using the ol' "front of the knee pain = too low, back of the knee pain = too high" trial-and-error method and haven't killed my legs yet. I'd like to see how close I've gotten to "ideal" by getting a good, professional fitting someday.