I know that the point level of your class affects your GPA and an A will influence you GPA better than a B will. My question
is, does it look better on a high school transcript if you have low A’s and B’s in honors level (.4) classes, or all A’s in lower level classes (.3/.2)??
It’s better to get A’s in honors classes. Regardless, it’s always better to challenge yourself with the harder classes.
I think it depends to a certain extent on where you are applying to. I heard a parent ask this very question to the admissions dean at one of the “Colleges that Change Lives” schools. The dean replied they would rather see a C in a difficult honors class than have an applicant take the regular course to get an A. At the very top schools, I expect this is viewed somewhat differently though.
It’s a balancing act. My advice is to take the hardest classes possible while keeping your unweighted GPA above 3.5. Obviously, it can be lower if you go to a difficult high school where you’d be the valedictorian with a 3.5. 
You need to challenge yourself if you want to be prepared for college, but some universities have hard GPA or class-rank cutoffs for scholarships, honors programs, etc.
@halcyonheather You make a great point. I’d add that many students would find it useful to ask their GC’s for a copy of the school profile sheet that is sent to colleges along with the student’s transcript. This would give the student an idea of what/how others are doing in their own school, and then how the ad com would view them in comparison to their peers.