Hunterr,
Interestingly, no one that I know of in the modern world of boat design has ever written or discussed any guidelines as to how to make a chine line and at what heights the chine should be from bow to stern. I have always advocated that this is an excellent field of study for someone doing a master's or doctor's thesis in college.
That said, if you are working on a powerboat design, then the chine at the stern should be just slightly under water, as Grant said, and then a mix what looks good and what the requirements would be for the deadrise of the bottom surface in the forward half of the boat, also as Grant alluded to. The sweep of the chine line is done pretty much by eye as anything else, kind of by a gut feeling for what you think is going to work. There are very few guidelines to follow.
In the last two decades or so, some designers, myself included, have added chines and lifting strakes to sailboat hulls. Actually, chines go back much further--centuries--when boats were made of planks and the some of the butt joints between planks were chines. But the modern era of the last few decades the designers have been putting chines and strakes in rounded hullforms simply to benefit from the hydrodynamics that chines and strakes provide. Witness the last few runnings of the Volvo Round the World Races--almost all chined hull forms. For these boats, the styles vary--some will have the chines partially submerged at amidships or aft, some will not be submerged at all anywhere along their lengths when in the upright position. Again, there are no hard and fast guidelines--you draw what you think looks right, try to justify your choices one way or another, and move on. That is one of the nice things about boat and yacht design--you can let your imagination go with the flow, so to speak, and come up with intriguing vessels.
Good luck,
Eric