How do I determine what should be set for height ratio and reference plane on a given material?
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Depends on your heightmap (color range, smoothness) and what you want your material to look like.
In case your heightmap is not blurry and has strong gradients, you'll need to use low height ratio values, like <0.01, to avoid parallax mapping artifacts (texture swimming).
Reference plane determines whether the surface looks like it's popping out or sunken in. With the default value of 0.5 you get both, assuming your heightmap ranges from pure black (0) to pure white (1).
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