http://en.wikipedia.org/wiki/PID_controller
You want to read that link... it will help a lot. PID is just a feedback mechanism and in a nutshell, takes in a current and a target, find the error between the two and tries to fix that error. The P is the proportional, and basically what it does is control how quickly you want to get to your target, we use Pots for our arm control, and use our own PID algorithm to get to the target arm location, I would suggest you use Victors rather than jaguars for such a task however, windows seem to like victors rather than jags. Either ways, there is no "maximum" P, what you need to do is tune your system according to the load on the motor, start off with a P of 1, I of 0 D of 0 and move the arm, if its too slow increase the gains (P, I, D), if its too fast just bring down the gains, make sure nothing is negative btw. Also, for your arm, I am sure you know this, but if you are using CANJaguar you can simply do jag->SetPosition(pot value here) (range being 0-1), and the jaguar will automatically get you to that position using PID. Good luck!