What are the guidelines for positioning your brake levers? Flat (upper surface of the hoods horizontal), tilted up, tilted down? How are yours positioned?

Dunno about any standard, but for me it differs depending on the type. My road bike with brifters has them darn near flat, as though they are extensions of the top of the bar. When I was setting up my touring bike, I found that I liked them tilted up a good bit because they aren't as beefy as the brifters and don't feel as good flat. Then again, the difference in handlebars and geometry between the two bikes may have something to do with it too.

Something like this: a small upward slope on the flat part of the hoods.

I set up the bike on the trainer with both wheels level to each other, using a book and some magazines to lift the front wheel the right height.

First, I get the drops set to the angle I want. I like the newer shallow drop bars to be fairly horizontal at the bottom, with a small downward angle.

Next I move the shifters up and down along the curve of the bars. I try it out with just a slight upward slope, then move it up a little more if my hands feel like they are sliding forward. I want to shake out my arm to a neutral hand position, set it on the hoods, and have it feel even pressure on the front part of the hood and on the heel of the hand. It takes me a few tries to get it all set.

I don't have a big drop from the saddle to the bars. A bike with a bigger drop would probably feel better if the hoods were more horizontal.

A random bike photo: