1script - 4:14 pm on Jul 27, 2012 (gmt 0)
I still have a couple of sites that are literally banned by Google (and sporting RR denied notices in WMT) - they tend to gravitate towards the bottom when "By site health" button is pressed (darkened). So, yes, I think higher means healthier.
Its also not clear to me that higher would be healthier.
On the other hand, given that my banned sites are not at the very bottom (in fact, their non-www versions are rather in the middle somewhere), I think it's quite clear that this "health" they are talking about only concerns some technicalities and not overall "site's standing" with Google, so to speak.