From an article I have:
So, the question arises of whether or not the knees coming in front of the toes during the Olympic squat is dangerous. Fry, Smith, and Schilling (2003) examined joint kinetics during back squats under two conditions.(1) In the first condition, a board placed in front of the participants' shins restricted the forward displacement of the knees. In the second condition, movement wasn't restricted at all; they squatted normally, and the knees passed the toes (gasp!).
The researchers found that restricting the forward excursion of the knees during the squat increased anterior lean of the trunk and promoted an increased "internal angle at the knees and ankles." The results were a 22% decrease in knee torque and a 1070% increase in hip torque!
Sure, they "saved" the knees by limiting stress on them, but those forces were transferred more than tenfold to the hips and lower back! The researchers concluded that "appropriate joint loading during this exercise may require the knees to move slightly past the toes". "May?" Ugh. I mean honestly; look at these photos that the authors included. Isn't the lumbo-pelvic position in "B" just lovely?
Source: Fry and Smith, 2003, J Strength Cond Res.