I had the same problem with my heel striking the panniers when they are mounted on the Sunlite rear rack of my Giant MTB. Luckily, I’m using the Jandd Economy panniers, and they have a three-position daisy chain loop for the bungee frame hook. You can slip the bungee hook through the forward loop, slide the top J-hooks to the very rear of the rack and that will solve the problem … most of the time (it did for me).

But if you need to move the panniers even further back, Jandd has drilled additional holes in the plastic stiffener between the two top J-hooks. You just remove the nut and bolt holding the hook and pannier to the stiffener, open up a hole further forward on the panniers you can move the hook to, and you can slide the J-hooks back even further when you hook the panniers on the rear rack.

Here’s their instructions: http://www.jandd.com/Technotes/technotes_panniers_2.asp