I try to just get the amp sounding good in the room. Obviously, if it's too loud it's going to ruin the mic. Sometimes I'll use a power soak, or something else between the amp and speaker to **** it up. If the musician is playing near his amp in the room, he will usually set the volume to where it works the best.
Kellyd.....when placing the mic, here is something that you may want to try. Plug the guitar chord into the head, put your thumb on the tip, so that it makes the amp buzz. Then, cup your ear with your other hand, stick your head near the speaker and move it around. You will hear a place where the hum becomes bigger and fuller.....and that's where I try to put the mic.