I've established what I feel is a strong CTR across all groups in a campaign that's been going 1 month. I've still kept my bids fairly high. When do you slowly start notching down your bids?
I wouldn't ever, the cost of your actual clicks will always be the lowest. if you start lowering them, you will just end up with less traffic.
You shouldn't reduce the bids just because you improve your quality score. A higher quality score with the same bid means that you'll get more traffic at the same cost per click. Since the conversion rate is largely unaffected by your advert's position, improving your quality score won't affect your ROI, so more traffic at the same price is good (assuming that you were making money before). That said, you need to find the sweet spot for your advert - the position at which you make the most money. The ROI will almost always be higher, the lower your advert appears (the only time that this would not be true would be if the conversion rate was higher in higher positions - can't think why this would happen), but the volume of traffic is higher in higher positions. I've written a blog on this, if you're interested (http://www.epiphanysolutions.co.uk/blog/ppc-advertising-where-is-the-sweet-spot.html). Finally, you need to take into account your daily budget - you shouldn't use your daily budget up before the end of the day, as you can bid less per click, and hence get more traffic, for the same money).
If you are concerned about your ads appearing in too high a position consider using the position preferences feature
Flip, I would start lowering them now if they've been good for a month. We do this on our accounts - Ggl will always try to make you pay more for your CPC if you are willing to. I'm pretty sure its written into the algo somehow.
Erm... how do arrive at that conclusion, when you don't know your competition's bids, their quality score or for that matter, your quality score? It doesn't really matter, as you only pay the minimum amount to appear in the position that your bid dictates. If you can reduce your bid by $0.01 and still appear in the same position, it'll make absolutely no difference to how much you actually pay per click...