Jim's overhead method seems to work out very well, especially with heavier tows. It can be difficult to gain steerage (even with the large rudder) because the tow speed is pretty slow. A crosswind or chop can be even more problematic when you're down to 1MPH.
For me, the best way to change course is to pull the tow arm forward, providing momentary slack enough to accelerate, turn slightly and establish a new heading. This can be done repeatedly as necessary.
A 20' 3/16 or 1/4" line is plenty for towing. You're probably going to be generating no more than about 50# of thrust, so almost anything will work. Most boats have a bow line (as in the case above) -- if so, it is usually plenty big. Comfort for the hands should be considered if you have very far to go.
