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Disclaimer: The following is my own analysis of the matter and should not be taken as a rule.

I have seen many statements that question the usefulness of good leaders at high positions. It seems that the penalty of the 'base factor' increasing two-fold per level seems too severe to make higher leaders useless in the rolls that they make. While this is true, people seem to forget that there are more combat units under these higher leaders and the number increases three-fold (or more) as as we go up the chain of command. So if the measure of effectiveness is changed from the probability of a successful roll to the number of successful rolls, then more will benefit from a good leader at a higher command level.

Taking the example of an initiative roll in page 176 of the manual we can derive the probability of success of a leader with a rating of 8. The other assumptions are maximum range for the command is used and that there is no excess in command capacity. Probability of succes is simply the Initiative Rating divided by the Modified Base.

Corps: 47%
Army: 25%
Army Group: 13%
OKH: 7%

When multiplied by the number of combat units under each command we can see the actual number of units that can potentially make a successful initiative roll. Assumption is that there are 3 units per corps, 3 corps per army, 3 armies per army group, and 3 army groups for OKH.

Corps: 47% x 3 = 2 units
Army: 25% x 9 = 2 units
Army Group: 13% x 27 = 3 units
OKH: 7% x 81 = 6 units

But that is just the potential of one leader. The following is an analysis of a whole chain of command in action where all leaders have a rating of 6 and only one with an 8. It is stated in the manual that the leader will attempt to roll if their subordinate leader fails. I then calculated the number of potential successful units under four scenarios depending on where the leader with a rating if 8 is. Apparently it does not matter where the Level 8 leader is. The total is 67 successful rolls out of 81 no matter where the level 8 leader is.

8 Leader at Corps: 67 units
8 Leader at Army: 67 units
8 Leader at Army Group: 67 units
8 Leader at Corps: 67 units

I ran another one where all leaders have a rating of 4 except for one with an 8. The results show that in a world of poor leaders, the good leader will contribute more at higher positions. The 8 Leader contributes more as he goes up the chain.

8 Leader at Corps: 41 units
8 Leader at Army: 41 units
8 Leader at Army Group: 41 units
8 Leader at Corps: 42 units

So what does this mean? There is no right or wrong strategy. While a good leader can potentially help more units at higher levels, the benefits are more pronounced if the overall leadership quality is poor. If the overall quality is average, then you can place the good leader anywhere without affecting the total. But despite gaining the benefit of more successful units, the increase in the scope of the leader at high HQ levels means he is responsible for a wider area of the map. This means you have less control on where exactly in the map the successful units will be. At lower levels, you are concentrating your luck on a smaller area. But you are also increasing the chances of them getting killed.

Not mentioned in this study is range. You can compensate for poor leadership by decreasing range but it only accounts of about 1 or two additional successful units. But at lower leader ratings, it the benefits are inconsequential and even non-existent so putting them at maximum range doesn't hurt. Good leaders benefit more from short ranges (i.e. putting a 9 leader at OKH and putting OKH HQ near the front lines).

My spreadsheet

Good analysis work jomni, very intresting to see that leaders higher up do have a effect its just more spread out.  Thkanks for the work you put into it [;)]

The example numbers seem a bit off for a rating 8 leader. You stated maximum command range and not over the command capacity limit. There is no command range modifier for a Corps commander so the the success rate would be 70% [Die(10)<8]. The Army commander's success rate would be 25.9% [Die(20+15/2)<8], the Army Group commander's would be [Die(40+45/3)<8] 15.5%., and OKH's commander's would be 6.8% [Die(80+90/4)<8], assuming maximum command range.

I crunched some basic numbers and I think it may be better to focus good leaders at the Corps and Army Group levels. They have higher command capacity ratios/spans of control. I did an analysis for an Army Group with the following assumptions ('41 command capacities):

Basic Combat Unit: Division
4 divisions in a Corps, 3 Corps in an Army, 4 Armies in an Army Group
Total Divisons: 48
Average Command Range: Corps=5 (but no range modifier), Army=10 hexes (+5 modifier), Army Group=30 hexes (+10 modifier)
17 Leaders: 4 8-ratings, 13 6-ratings
This means the failure rates as follows (I use failure because these are the only units that need help from higher HQ's):
Rating 8: Corps 30%, Army 72%, Army Group 86%
Rating 6: Corps 50%, Army 80%, Army Group 90%

Total failure rates were within 1 unit of each other for all the combinations I tried (not exhaustive but most). Best combo was 3 goods leaders at Corps level and one at Army Group level (14.861 units failed=31% failure rate). Worst combo was all 4 good leaders at Army level (15.552 units failed=32.4% failure rate). My conclusions are, that in order to maximize limited good leaders while prioritizing the critical combat units, place good leaders with the key Corps (i.e. Panzer Corps) and some at Army Group level. This also applies to OKH with the highest span of control.

This group can rock-load it up to the gills with support and take a key city-quickly b4 winter
Guderian at pz group
manstein at pzcorps
balck at pzcorps
model at pzcorps
the rest of your force-try to get over those rivers

Thanks for your input guys.

@magnum88 your right, my probability calculation was off because I included a roll of 8 as a success.