The higher you go, the lower the ceiling will look ...
It would probably look best being less than half way up -
- but it's a matter of taste, as you suggest.
I have wainscotting that's 4½ feet high - but the ceiling is nine feet. I also have some that's 42" - and the ceiling is about 7 feet. It looks good to me, but the wall space is not very big (bathroom) - it might not look as good on a long wall. But then again, it might look better on a long wall.
Can you paint the walls (or one wall) before you put up the wainscotting? If so, then paint the walls two different colors with the line being at the height you're planning on putting the wainscotting. (You don't have to do a great paint job on the lower half of the wall.) See how it looks.