The saddle height formulas are basically a measuement from the center of the BB, straight up the seat tube to the top of the saddle directly above, regardless of how much setback is used. That is adjusted according to personal preferance taking into account your femur length.

I know this may seem strange, but I tend to think that crank length is not quite as large a factor as you are eluding to. Mainly because the crank length usually only differs by a 0-5mm (<0.25") from 170 to 175. This, when the saddle height recommendations are given in 1/2" incraments. But like we have all said, it is just a good starting point. Where you go from there is up to you.