Best Of

Generally, you want the shapes in the high and low poly to match as closely as possible - this means that often the low poly will either be exactly the same size or both slightly bigger and smaller than the high. For something like a cylinder, the low should intersect with the high in a vacillating pattern. Here's an example (white lines are the high and black are the low):



Mismatches between the size of the high and low can cause problems when baking, usually resulting in the baked content ending up on the wrong section of the low, which means the normal map lighting and the shadowing systems won't be aligned. 

When you sub-divide the high poly mesh, curved areas will tend to shrink a bit. So this may be something you need for with the low poly. If you copy the cage mesh and optimize it for the low without taking into consideration the shrinkage, you can get mismatches. But inflating the high poly universally is a poor way to solve this issue and will introduce other problems. As you note - "Many details are pinched or completely deformed when attempting to displace the geometry of the high." - this is a very poor practice and should be avoided.

Neither the low nor high should be inflated or enlarged to cover the other for baking purposes, that's what the cage is for.

Neox said:

If you want your edges to be smoother, make em smoother in the high poly phase.

This is an art direction, maybe tech art decision to be made early on and then everyone can follow this ruleset for consistent bakes/textures.

 Yes, if you want your edges to be more round or to have thicker bevels for readability or style, this should simply be a part of how the high poly meshes are constructed, not a step you add at the end of the process.