Addressing the "where to rest the hand" part; I suggest you try to free yourself from resting the pinky on the guitar. It's going to stress-out your wrist because all the motion is happening there. Also, as a friend of mine pointed out, the top of the guitar wants to vibrate freely: pressing on the top will interfere with that vibration, affecting your tone and volume. Now, with a fingerstyle technique, you can rest a finger on a muted string, but never on the top (very rarely: rest on the edge of the soundhole). And with a pick, it'll stifle your attack, and reduce your ability to modulate tone by changing picking location because your range of motion is restricted to the length of that darn pinky.
Instead, imagine your arm is like the arm on a turntable: the pick is the needle, the elbow is the counterweight, and you attach the fulcrum to position the needle near the grooves. So the middle of your forearm rests against the edge of the guitar body so you can keep your wrist straight.
This way, all the power comes from your elbow. The wrist is now free to perform finer nuances like accurately selecting which strings to strike.
Now, to actually do a palm-mute now requires a slight modification. You hold the elbow bent but (relatively) motionless and you drive from the shoulder. So the picking hand makes a uniform motion across the strings, and you can bounce the palm against the bridge while striking. This lets you mute without choking: merely resting the palm on the bridge will mute the ringing as well as the attack, and you'll never get that sweet nymph-tone.
Even with a palm-mute, your picking hand should never be resting unless there's a rest in the music. And during such a real rest, the hand should rest against all the strings, preventing all sound. The forearm is the Drive Shaft of the pulse of the music. The chug-a-lugg of the tugboat. Drop no anchor.