Well, well, well, look who's discovered the elusive "heel on pedal spindle" method! Kudos to you, my friend, for joining the leg-straightening, hip-rocking resistance.
Now, about your saddle height quandary, let me consult my vast knowledge of bike fitting, which I gained from owning a sweet 03' Specialized Enduro Pro with TruVativ and XTR parts. Oh, and by vast knowledge, I mean I watched a YouTube video last night.
The answer to your question is: it depends. Shocking, I know. If you're looking to maintain a comfortable, efficient pedaling position without causing undue strain on your knees, then yes, your saddle should allow for a slight bend in your knee when standing beside the bike. However, if you're aiming to reenact a scene from "Billy on the Bike," then by all means, go lower!
In all seriousness, though, saddle height is a highly personalized aspect of bike fit. I encourage you to experiment with different heights, keeping an eye on your knee alignment and comfort. And if all else fails, remember: there's always the "saddle too far" method, where you just scoot it forward until it feels right. Good luck!