I had a similar article brewing now that I'm in the frame for third-line support and your two points at the end really resonate: don't die quietly and don't cry wolf.
I'll put my vote in for logging everything as you always wish you could go back in time and crank up the logging when an unexpected circumstance arises. Certainly don't log it all at the same level and perhaps not even in the same place. I've favoured separate log files in the past, giving both the low noise and the kitchen sink editions you describe.
If at all possible I'd suggest that if you can grep it or otherwise divine the situation from the log then you should consider making that logic part of your logging or management interface. In other words, don't leave that black art of interpreting the log output to individuals, don't just try to capture it in your wiki, but treat supportability as a proper requirement and embed it in the application.
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