Has anyone an opinion on what is best practice?

I read the manual and it is pretty vague about the influences.

Religions can be set to "illegal", "legal" and "official" -> anything but "legal" has positiv and negative effects.

It influences:
Population grow/decline -> economy Health -> overall Resource Production -> GDP
Stability -> Corruption
Diplomatic relations -> Treaties -> Everything

Examples:
With many Muslims, the arabic states and many more become very friendly towards you.
With many Buddhists, many oceanic states become very friendly.
With many Islamists, especially Malaysia becomes your best buddy.

You can drop a religion to 0.0% within the population by setting it to "illegal", it will drop about .1% every couple of days. Remember, also your friendly nations' relation drop, no matter what religion you set as illegal, but not as fast as countries with the majority of it. This goes so far as countries start attacking you.
Emigration will be at all time high with all those people fleeing the country.

"Official" seems to be what happens with new born babies. If I set a religion to official, it rises very slowly. The population will still grow and diplomatic relations are affected once you reach a certain amount of people with this religion.

"Legal" only seem to affect immigration, it seems to tend towards 0 over time (people with this religion die out). The population will still grow and diplomatic relations are little to not affected.

If you annex land, you also get their people and a bunch of new or already known religions with it.

Example:
I took over Italy and outlawed any roman catholics, once they are at 0.0% you can set them to legal again and it will not rise any more.