I am a swimmer turned triathlete. I have tried to do both hip and toes, and I find it difficult to stay on the hip. I heard it was easier, but the constant space invasion between me and the drafted swimmer ahead annoys me. On the toes it is easier but I get anxious about the direction the guy in front of me is going. I usually swim on the front pack of the wave I'm in, and it never is crowded at my speed (1:20 to 1:30 pace, depending on race distance and conditions).

As for the toe touching, I'm ok with a couple of times, but if someone starts doing it all the time, I tend to stop and do a bit of breastroke to let them pass, see where I'm going and maybe they'll get the hint via a powerful kick. It is not like I don't like to get drafted; at my usual pace I will always get people behind, but they have to be nice about it, or I'll get mad.

I think Total Immersion gets into the longer waterline concept IIRC.

When the wakes of two objects moving in a fluid interact the total energy loss from the larger combined wake will typically less than the sum of the individual wakes, with the leading trailing object benefiting the most but the leading object also experiencing reduced drag.
This is the case for cycling, cars, sailboats, etc....
However, there may be exceptions when the fluid is also being used to provide propulsion as is the case with swimming or motorboats.

When propulsion does not effect the fluid, let's use a car as an example, the car moves forward through the air and the shear which creates the boundary layer means the air close to the surface is dragged along with the car. The air closest to the car moves at the same speed as the car, and beyond the boundary layer it hardly moves. It takes energy to accelerate this mass of air. This is drag. If the second body can move through air that has already been accelerated by another body just ahead of it, there is less shear and it experiences less drag. The drag is not all produced in front of the object by "pushing" on the air as most people imagine. Much of it is produced by the wake as it flows behind the object producing low pressure zone "pulling" the object back. When two objects move close enough together in tandem, there is only one wake which mostly impacts the rear object. So the leader benefits too. When there is a significant gap between objects as opposed to an almost unbroken surface, the front object would still have a significant wake but will nevertheless benefit somewhat from being drafted. This is the situation for cycling or sailing.

When a swimmer is pushing water backwards to move themselves forward, things become more complex. Likewise for a motorboat and even more so for aircraft where compressibility and thermal effects may be very significant.

Toe tapping: I use the 3 strike rule. If you draft me and tap my toes (ankles, etc.) more than 3 times, you're "out" and I'm going to roll over on my back and let you lead (as obviously I'm swimming too slow for you). I'll then start drafting you.