Is it ok to extend/straighten legs fully while pedaling and will it give me maximum power? When I first got my bike, I had the saddle too low and I experienced some pain in my right knee while riding.  I seem to have "fixed" this problem by raising it some.  However, that got me thinking... what would happen if I raised it even more so that my legs would be straight (not bent at the knee) when the pedal was at the bottom?  Would this give me increased power?  Have power tests been done to verify what level of leg extension produces the most power?  Are there any problems allowing your leg to fully extend (straighten)?  I may try this sometime but wanted to get some info here first.  I asked someone at the local bikeshop and they told me there is a chance of hyperextending if I do that but I asked myself how if the position is fixed?  I think the general rule is to have a little bit of knee flex while the pedal is at the bottom but maybe that is a guideline and not a "hard" rule. 

I wanted to add that I don't use any fancy riding shoes or any clips.  Just regular "street" shoes. Also, my typical longest ride in a single day is only about 10 miles max.  That translates into about a little over 1 hour at an average speed of less than 10 MPH.

Also, I am not sure why some people might say it is "bad" to straighten your leg totally when riding cuz when we walk we have alternating straight legs so why not the same when we ride a bike?  When we lift a heavy object off of the  floor, the hardest part is when our legs are bent the most, indicating that is the most inefficient position.  When our legs are nearly straight it is much easier for us to lift weight such as a heavy box that is already at waist height for us.
I seem to have "fixed" this problem by raising it some. However, that got me thinking... what would happen if I raised it even more so that my legs would be straight (not bent at the knee) when the pedal was at the bottom? Would this give me increased power? Would this give me increased power?


Saddle height is a well known as an important factor for power generation on the bike.  There is however a sweet spot. Too low and you don't get to fully use the power range of your quadriceps.  Too high and you will over extend and lose power (as you are heading outside the optimal functional range).  

Your optimal saddle height is also affected by your flexibility and position on the bike.  For example, if you are riding a road bike (that has a low slung cockpit position) hamstring flexibility becomes an important factor when determining your optimal saddle height.


  Have power tests been done to verify what level of leg extension produces the most power?


Yes.  This has been studied thoroughly. And while there are lots of general rules of thumb to get you into good starting place, the best possible saddle height is individual specific and depends on your own unique biomechanics (and can change over time).  Saddle setback (front/back position) is another important factor for power generation.


  Are there any problems allowing your leg to fully extend (straighten)?


Yes, this can lead to various repetitive stress injuries caused by how your body compensates for the saddle being too high. Different people may compensate in different ways and get different injuries as a result.

As a personal story, I was on recent short/fast/light tour when at in the final stretch I was getting some knee pains (outside, IT-band related) and I still had 120 km to finish the next day in order to catch a ferry and meet the kids in time for camping.  After much consternation that evening, I tried lowering the saddle by 0.5-1.0 cm (as I was using a different shoe/pedal combination than normal).  This completely alleviated the problem and I was able to ride the distance the next day and make the ferry sailing.

In the end the best advice is to make small changes and wait a bit to see the end effect. Record these changes in a notebook so you can look back and see the big picture. None of this is an exact science because each person has some aspect of their biomechanics that makes them unique.