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I'm wanting to convert basic daemonettes into heralds and to do so, I thought I'd add some height onto them. So:

Where do you cut the models at to do it? I'm assuming one cut below the knee, one mid-thigh, one in the forearm, one between shoulder and elbow and possibly one mid-torso.
What do you use to make the cuts? I have an exacto-knife and a razor saw, I'm going to assume a razor saw would be ideal for these cuts
How do you trim up the plasticard so it looks flush with the model's original pieces?
What thickness of plasticard do you use? I'd assume it would have to be fairly thick to add additional height as well as replace the material destroyed by the saw.
Will normal Testor's plastic glue work with plasticard? I'm pretty sure it would.. I'm just making sure
Are there any inherent dangers or issues outside of cutting one's self to worry about? I know I shouldn't put the glue on my bagels for breakfast or anything stupid, but is there anything else a first timer may not know to look out for?
About what percentage size increase can you average before the model starts looking too gangly? I really want to be able to quickly spot the modified ones from a crowd of normal daemonettes, but I don't want them to look goofy..

You might want to check out the threads on true scale marines as you want to do something very similar.

I haven't done this myself but from reading about it you seem to have the right idea. Definitely use a razor saw for the cuts unless you have your doctor on speed dial. I'd think the best way to get the card flush is to do a rough trim and then sand it down. The glue you mention will work just fine.

i would go for a small spacer between: lower leg, upper leg, torso, forearm.

make the spacer a little thinner than the actual area its in, then use GS to fill it in and blend it.

i would go with the saw in this case.

size is all about person oppinion here, if it looks too big then simply remove a spacer or use smaller spacers.