Little mac,
Doing lunges with knee going past your knees is very proper form. Just look at the examples in everyday life. Tying your shoes requires you to shift weight into the front foot causing the knee to go over the foot. Walking upstairs your knees will go past your foot. Sprinting your knees must go past your foot and squatting.
Cynic,
Using chuck taylors will make the movement harder because of the increased proprioceptive quality of the shoe. It is best to lunge into the area between the heel and the ball of your foot.
The lack of balance (from my experience) is most of the time a lack of ability to recruit more muscles into action (namely glute medius, internal obliques, and anterior tibialis etc.). Before someone lunges he/she better know how to squat with feet facing forward(without weight belts and crap like that). I would progress to bulgarians.....then static lunges or split squats and so on.
While this is going on you will need to do exercises that challenge your body in "frontal" and "transverse" plane. This should help increase your neuromuscular efficiency and bodies "proprioceptive" awarness.