I wasn't going to comment (do I hear cheer's?) but have been inspired by the excellent information supplied by the aways lovely and alluring Princess L.
The toe/knee in-line thing can fall into the disinformation folder for the majority of trainee's. The in-line center of gravity and the fact that everyone is not structured the same way, gives cause for the creditably of this idea. I don't think that anyone would, in the real training world, want to limit the flexability of the knee/thigh this way, with regards to the muscle/joint action. Too much unneeded stress produced. If the step-up is applied (alternate legs), rather than regular BB squating, than that toe/knee position can be preformed without undo stress, as with lunges. Bulgarian squats fall into this class. Any of the above are very good ham builders also.
This is not to say that most people should not do the toe/knee style, a few can without undo troubles. That is their leverage/insert/joint placements disposition. Any and all exercises should be given a fair try at least for a short period, to test the muscle/joint responces. Bad or good will depend on the individual and their responces.
Some coaches, in the past, have used a piece of plywood (3X3 or whatever suits the purpose) and have the trainee place his toes against the bottom, with the knee's brushing that board to learn the toe/knee style. Some have used a rope or board. The stance is usually wider than normal. Not that it would matter much, but I would not suggest anyone of those methods. As mentioned, the box squat is a prime way of learning to not only use the thighs but the hips, butt & hams. You are sitting back with the back and head straight (like they taught us in missionary school). You lead with the hips/butt, with strong influence from the hams, rather than only the legs themselves. It's somewhat like shifting gears in a car, different muscle phases all the way to the top position. Flexability is quite important with this style of box squating. Just about everyone will be too stiff, with limited range, at first. It doesn't have to be a box it's self. Guy's use benches, etc. A couple of PL'ing bud's of mine use two turned over buckets. Two buckets for their rather large 300lb arse's.
Putting the heels on a 2" block (or whatever) would be counter productive and certainly proned to injury if one is serious about actually doing toe/knee line squats. Just follow the track of the knee, with regard to the body, to understand this. And as Princess L stated in her impelling insights, the Smith machine would be the last peice of equipment that anyone would want to use when attempting to do toe/knee inline squating. Good Luck.