I tend to go as far as necessary. It really depends on what element of the sound is most important, and what is really needed to make an audience believe what they're watching.
I wont just shelve at -3db but will completely cut out the high or low. I even use notch filters if I hear frequencies building up. Or I feel a frequency is unessecery at that moment.
If the sound I've recorded or am using isn't completely clean I'll use an expander. Pushing low laying noise further down keeps it from building up with others.
But when you say 'space', I start to think in three dimensions. I use reverb to give each element it's own three dimensional spot. Granted picture limits how much and what kind you use, but you can cheat with a little subtly. Plus depending on wich reverb I use I'll shape the frequency of the reverb too. Keeping it from getting in the way of other stuff.
As for going to far. I go as far as I can untill I realize it's not working, then I pull back. Lastly mixing to me is more about showing the audience things. I mix for what I want people to pay attention to at the moment. If they're drawn to one thing, they'll drown out the rest on their own. I find thats what I do when I'm a viewer.
Most recently I found myself shifting focus based on the mix when I was watching Contact. The opening is a mash of sounds. Listen closely and you can hear them bringing levels up and down to shift your focus. They do it again when a character is watching 4 tv channels at a time.
Mixing is my favorite thing to do. Good Luck