Katmando,
You want your bike to be on the ground. Best if you have someone on it. At the bottom of the swing arm where the chain exits the guide, you want to push the chain upward towards the swing arm. Only one links distance from the end of the guide. You want to have a measurment of approx. 5/8" from the top of the link (link paralel to swing arm) to the bottom of the swing arm.
Don't use the two or three finger method, thats for 'blue bikers' only :p
This tension will NOT cause a bearing to fail. Bonehead had another problem, I'm sure. It is VERY important that you have the axle perpendicular to the chain travel. In other words, if you dont have both sides of your adjusters exactly the same distance, you run a chance of damaging something else...ie: a wheel bearing.
Bonehead, if you are the only one that runs their chain that loose, does that tell you anything?