Completely agree there's a balance, and it depends what suits you and your child.
Sarah Ockwell-Smith is sainted by many people on MN, but her methods don't work for all babies - and co sleeping doesn't work for all parents either! My DD gets no sleep at all if she's in with us, so her book was no help to us at all. I have been tearing my hair out with so-called 'gentle' methods trying to get my DD to nap, and it turns out they are all too overstimulating for her and I needed to back off and leave her alone (in a completely dark room with white noise )
I'm sorry, I don't think I'll be completely accurate answering your questions but here goes:
From what I've found (and the sleep consultant I've spoken to) most children take 3 days to form a habit, so respond in that time
Going in or leaving them is up to you. You can set your own time limits like 'go in after 5 minutes of crying, then next time after 10' etc. I was advised that after an hour of trying, including 'breaks' when you are soothing them (this is for naps) then take a proper break. Turn on all the lights and go and do something else for 30 minutes
As for how awake, I think you are meant to follow their tiredness cues. My DD always sucks her thumb for example. I do agree with @Nuckyscarnation that 'drowsy but awake' is some mythical state that doesn't exist for most babies. Mine goes down awake!
I am in the thick of this and as DD is only 5 months and also ok at night (I have to feed her to sleep but she actually is going to sleep, unlike in the day) I haven't gone 'cold turkey' as it were as I'm only doing it for daytime naps with mixed results. Morning naps she grumbles for 5-15 minutes then gets herself off to sleep. Afternoon naps are a raging battle and I am stuck because going in to comfort her enrages her more, but I don't like the idea of just leaving her. I am yet to figure something out, at the moment she just isn't napping in the afternoon and is a mess by bedtime.
And before anyone asks, yes I have tried feeding to sleep in the afternoon and she just doesn't want to sleep!
Good luck and let me know how you get on x