Is there a basic rule of thumb for determining the tension on thread while wrapping? Can you make the thread too tight?

Yes you can. You need your wraps to be snug, but no more. Best rule of thumb is to try and move/shift the guides into alignment after wrapping. If they move very, very easy - your tension is too light. If they require undue pressure to move - your tension is too tight.

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Mike : You should be able to move a guide once you have wrapped it on. I just answered this question in another Question. You'll see more info there. I got kind of long winded. And, Yes you can make the thread too tight. Careful careful, practice, practice.

Every one answeres your question correctly. You can crush a blank if you wrap to tight. you well not know it was to tight until you firdt fish hits your hook. You recive two correct answers on how to check you guide for tension.
Bob