Ugh, tried replying to this earlier but danged nightly site maint. Oh well, keeps this wonderful repository of info up and running I suppose.
As for your question, it really depends. As far as maximum height, you could go as high as 36" or 48" with no ill effects, but it all depends on optics. You could also push them all the way very close to the water surface(you'd use an acrylic sheet as a shield to protect it from the saltwater), again depending on optics.
With tubes or halides, the lights are flood type lights. They flood an area with light, and we use reflectors to try to intensify and reflect the light to where we would like it. LEDs on the other hand are spotlights. With tight optics a tight yet intense beam is given, and with wide optics the area can be quite wide yet the intensity of light diminishes. The problem is that while you can cover the sandbed fine, you could leave the upper levels of the tank with thin spotlighted beams separated by dark areas. The goal is to balance lighting your corals/rockwork/sandbed while keeping the light focused so that it does not leave the confines of the tank so that all the light intensity is used for it's purposes.
The spotlighting aspect is a clear problem for many trying to figure out LED's, however it does have great upsides as well. It can allow a tremendous diversity in lighting. My ideal setup would be a mix of LED par 38's and some custom LED par 16's in par cans (
http://www.fluxitylighting.com/wp-content/uploads/2010/06/standard-par-can.jpg ) set as track lighting above the tank focused downward at angles into it. Set in combination with a controller, even some of the simple DIY ones, some absolutely beautiful(such an unmanly word) moonlight and sunrise/sunset effects can be achieved. I'm not sure of RC's policy on referencing other forums, so if I offend I do apologize, but one of the best examples of that nature which I can think of can be found on nano-reef.com's post from evilc66(the king LED guru, creator of the LED par3x for reefs and the reason many have come this far with using them for lighting their tanks) in post #205 of his 40b build.
http://www.nano-reef.com/forums/index.php?s=&showtopic=169131&view=findpost&p=2172527 a moonlight beam effect wasn't what he was going for, but you get the idea of the possibilities.