Glenn - Being the most qualified to speak on this subject (since I cracked my canopy in just the manner you described by miscalculating the appropriate length of said chain /w3tcompact/icons/smile.gif), I'll take first crack at responding.
What I do, when I'm thinking, is just use a longer chain. As for where to hook the tongs, the rule of thumb I use is, the bigger the tree the higher you grab it. This accomplishes two things: 1) It reduces the length of the chain you need (or the damage to you or your tractor if you mess up) and 2) It puts leverage and gravity in your favor, so you can pull over bigger stuff.
The size of the tree you can pull varies greatly with how dry the soil is, how packed it is, what kind of soil, the root system on the tree, etc. But I've found I can pull 4" most of just about any type just about anywhere. Bigger ones can be pulled a lot of the time, depending on the variables mentioned.
Mark