Yesterday, Alliteratus Bane talked about how revisions don't necessarily make the story better; they merely make it different. He also said that in order for revisions to do any sort of good in terms of improving the story, then they have to be done right.
I agree completely, as I tend to do with my fellow Alliterati (and no, we don't discuss these posts with each other beforehand -- I'm saying this after having read the post yesterday), and would add that I feel the best way to do revisions is systematically. Write the first draft with the first thing that comes into your mind: go ahead it's fun, all you need to do is get words on the page after all (full disclosure: I attempt to do this myself -- it's kind of hard being the research-oriented type I am).
During revisions, I attempt to approach things at different levels. The first is to examine the text for plot holes and inconsistencies. Did I say the character had green eyes on page 25 and blue eyes on page 300? Did I give the character 2 different names? Is a character introduced twice? (Actually happened during a previous read. I'd rewritten the opening chapters of Callarion at Night and Nicolai ended up accidentally getting introduced twice). Can xxx event really happen this way?
Second step is to make sure all my research is reasonably accurate. I say reasonably because you don't have to necessarily have everything be spot on; you need only be consistent. Consistency is key, even when you're wrong about the way something could happen. So long as you're consistent, your readers will forgive pretty much anything.
Third step is to repeat steps one and two a few more times. (I'm convinced you need a few passes minimum for the first two steps.
The fourth and final step is to read for sentence structure, grammar mistakes, and spelling errors. Once you've done that, and repeated these steps as often as needed, then you should theoretically be good to send it to beta readers.
Then you get to do it all over again. Great, right?
So how much revision is too much revision?
Simple answer: When you find yourself changing something just to change it. i.e. rewriting a sentence just because you feel you need to find something to change. Once you find yourself doing that, then it's probably time to send your work out.
These are just my thoughts of course; what do you think?