i know its a little confusing, but you gotta just picture your shoulder blades pinched all the way back doing dips. when they ARE pinched at the top of the movement, you can only do up so high...

that's how I have always done them...

as an aside...doesn't elbows tucked in or left out impact more whether dips hit the tris or the chest?

To hit chest, I lean forward. Conversly, for tri's I try to stay as upright as possible.

I do 3 different types of dips:
chest: close-grip, lean forward, elbows tucked in and pointing backwards
chest: wide-grip, elbows flare out, head looking down (similiar to that hairy dude)
tri: close-grip, stay upright, elbows tucked in

see, it's almost like a double-edged sword though.

when you keep them pinched back the whole time, it takes away your shoulders keeping the stress on your chest...which is what i like keeping 'em pinched back.

BUT, when doing tri's...

when doing these for triceps, not chest, it seems like you don't get your tri's involved as much as possible b/c at the bottom of the movement the stress is on your core, as opposed to your tri's.