At the moment, I have Panda Cloud Antivirus Free Edition installed on my Windows 7 partition but it does not have any level settings.
I prefer configurable antivirus programs because I like to tweak them. Generally I set them on the higher side but not the highest setting if I don't like the default settings.
Depending on which product I am using on a particular day, the one common setting is that I want to be prompted before files are deleted. False positives are much more common than actual malicious files. At least in my experience.
And, that's a practice everyone using an antimalware application should follow. As you well said, FPs do happen... a lot. It's specially problematic when they delete system files.
And unfortunately, that seems to be a default setting on a lot of security programs... to automatically delete the file the program finds. I always adjust that setting to 'Ask before doing anything'.
i configure my security software to min system impact without reducing its effectiveness.. but currently im not using any realtime AV or AM..
I usually do configure all my AV software to the highest possible, even if it means thousands of pop ups (HIPS)
On my avast! Free Antivirus: Only one essential real-time shield (File system shield) installed (default settings + PUPs' scanning enabled); AutoSandbox disabled; Hidden avast! tray icon; Silent/Gaming Mode enabled; Totally password-protected; Highest possible settings for Full System scan; No scheduled scan; Other settings = default.