There is a well-known argument that if we write the wavefunction as $\psi = A \exp(iS/\hbar)$, where $A$ and $S$ are real, and substitute this into the Schrodinger equation and take the limit $h \to 0$, then we will see that $S$ satisfies the Hamilton-Jacobi equation (for example see http://physics.bu.edu/~rebbi/hamilton_jacobi.pdf).
I understand this, however I feel that I don't understand the claim that this shows that quantum mechanics reduces to classical mechanics in the $\hbar \to 0$ limit. I am confused because I would think that in order to show that QM reduces to CM we would need to show that as $\hbar \to 0$, $|\psi(x,t)|^2$ becomes very narrow and that its center moves in a classical trajectory, ie $|\psi(x,t)|^2=\delta(x-x_\text{classical}(t))$. And it seems that the above argument does not at all show this. In fact, my understanding is that all that matters for the physical measurement of position is $|\psi|^2$ (since this gives the probability distribution) and hence the phase factor $\exp(iS/h)$ seems to not matter at all.
Moreover, some books (see pg 282 of http://www.scribd.com/doc/37204824/Introduction-to-Quantum-Mechanics-Schrodinger-Equation-and-Path-Integral-Tqw-darksiderg#download or pgs 50-52 of Landau and Lifshitz) give a further argument to the one mentioned above. They further say that if $\psi = A \exp(iS/h)$, then $|\psi|^2 = A^2$ satisfies the classical continuity equation for a fluid with a corresponding velocity $dS/dt$, which in the $h \to 0$ limit is equal to the classical velocity.
This argument makes more sense to me. However, I still have some questions about this. (1) I know that there are stationary states whose modulus squared does not evolve in time, which seems to contradict this interpretation of a fluid flowing with velocity v. (2) The fluid interpretation seems to perhaps suggest to me that the wavefunction reduces in the classical limit more to a wave than to a particle. (3) This doesn't show that the wavefunction is narrow.