Well, following some enquiries and discussion in another part of the forum it turns out that the best level for minimum fuel consumption at green dot/Vmd/holding speed is around FL250 for most jets.
The rule 'as high as possible for as long as possible' applies in cruising flight where you are flying for range. This gives the best TAS/fuel burn ratio. In the delay scenario, you are flying for endurance and the lower level is better. There are also some handling benefits at lower levels. Interestingly though, unlike cruise there does not seem to be a huge difference in fuel burn at Vmd at different levels.
One other interesting point to come out is that Boeing, at least, adds 5% to predicted fuel burn for flying a holding pattern (as opposed to in a straight line). This is because additional thrust is required in the turns.
So what can we in ATC take from all this?
When faced with a long delay the optimum profile is:
- descend to around FL250
- reduce speed to Vmd
- absorb as much of the delay in a straight line as possible (this means early advice of a long delay is highly desirable)
- if necessary to hold, extended length patterns reduce fuel burn