This maybe one of those personal preference answers, but how should a setup feel if its balanced?

You already answered your own question. Some prefer tip up and some like tip down. I like a casting combo to balance right on or just in front of the reel seat nut. If I can get it balance anywhere up to the hook keeper is fine. As long as it's not tip heavy. That I can't stand.

It is personal.  Bear in mind the balance is different with or without a lure on, that will even change using a variety of different lures.  Does makes a good argument for carrying 10 rods all pre rigged and balanced for the exact lure you plan on using on that set up.

Most of my combos feel pretty good with just rod and reel, once I put lures on they do become tip heavy.  I'm not overly bothered by the inconstancy in balance.

There is no right or wrong. It's 100% personal preference. How you grip the rod and the feel you prefer vary too much person to person for there to be an exact science. 

A "balanced" rod will remain in the position you want to fish it in when you release your grip.  I want my crankbait rods to be slightly less than horizontal, my jig/plastic rods about 10 o'clock.  This is my preference... you'll determine your preference.

 

With all due respect to SirSnookalot, I'm balancing my rods to be able to more easily feel what is at the end of my line.  Balancing is done without any additional "bait weight".  While fishing I want any additional weight, including the "bait weight" to put the rod combo out of balance... that is what I want to enhance the feeling of.  I want to feel the bait, the increased weight of the bait and the decreased weight of the bait.

 

 

oe

I'm a tip-light guy. W/o any lures tied on.

 

Similar to OE, I like my rod up maybe 45º 

from horizontal.

I'm a tip-light guy. W/o any lures tied on.

 

Similar to OE, I like my rod up maybe 45º 

from horizontal.

 

Me, too!

 

Regardless of the actual weight, a well balanced rig will give you the illusion of weightlessness.

 

 

 

Most combos are at least slightly tip heavy and the longer the rod, the heavier they are.  If you use a rod for moving bait presentations like crankbaits, spinnerbaits, swimbaits, etc, the combo will always be effectively tip heavy due to the drag created by the bait.  It's only with "still" presentations like worms, jigs, dropshots, in which you hold the rod still while feeling for a bite that balance really becomes important.  A balanced combo in that situation increases the sensitivity and allows you detect bites better.  Road Warrior is right in saying that the total actual weight of the combo is not the important thing in this situation.  The fine motor control muscles in your hand will become less fatigued and you will retain your ability to detect bites better - regardless of the total weight of the combo -  if it is balanced.  I have a 7.5' flipping rod that was significantly tip heavy and I hated it because I just could not feel light bites with it after an hour of fishing.  It was a rod with high end, light graphite and I was leery of weighting the butt section thinking that increasing the overall weight of the rod had to be a bad thing.  After all, I had paid big bucks for that high end graphite!  But I eventually decided that butt weighting was worth a try to get the rod to a point where I was willing to actually use it.  Night and day difference and now it's one of my favorite rods to fish.    

Whether having a combo balanced as well as it could be may depend on one's style of fishing.  I do not fish plastic worms or jigs too often.  When I do fish a jig it is not a traditional bass jig with trailer, I'm fishing for peacocks and there is no need for bite detection, not a delicate strike.  The majority of my fishing is using moving baits.