I got back from riding this afternoon and looked at my rear tire only to find threads where there should have been tread. I guess the observation wasn't that surprising. My rear tire was definitely nearing its life expectancy. I guess you could say, it was only a matter of time(isn't that always the case).
So, when should you change to fresh rubber? Obviously, if you get a bad cut or the tire is defective, it is a no-brainer. But, given normal conditions and wear and tear, I usually wait until I see cords poking through before I toss the tire. Also, if the tire seems particularly flat-prone, that is also a sign that the amount of rubber left is at critical thickness. Clearly, your mileage may vary and I am only telling you all what my criteria is.
If I have decided to replace my rear tire, I usually move the front tire to the back and then put a fresh tire on the front. Because of the design of bicycles, rear tires wear out more quickly than the front tires. So, unless there are big cuts in the front tire, it goes on the rear.
This raises a very critical point. It is much easier to steer you bike if you have a rear flat than if you have a front flat. That's because you steer with the front wheel and if the tire is flat, steering is horribly compromised. So, if you ever do flat on the front, if you aren't 100% completely certain about the integrity of the tire, it might be a good idea to swap tires for the completion of your ride.