I'm with the other David on this one. 1.2 or 120% is about right. Anything smaller tends to mean the lines aren't distinct. And at 1.0 or 100%, the letters will touch on the fonts I tried. From memory, the definition of the line height means they should touch.
There was discussion on this a while ago. In a "tweaks" thread I think. You can edit a conf file on the device to set it to 1.2 or edit the settings in the content_settings file. And the actual minimum is 1.225. At least that is the smallest number I tried that made a difference. I could see a difference between 1.225 and 1.25 but not between 1.225 and 1.2.
Having said that, if I was specifying this, I think I would have gone with a range from 1.0 to 2.0 in steps of 0.1. Maybe I would start with 0.9.