If you can't get the action on your guitar to at least 2/32 at the 12th fret you must be doing something wong. If you have buzzing near the headstock to the 5th-7th fret or so, you need more relief in the neck. If it buzzes above the 12th fret, less relief, then raise the saddles. Usually, all that is needed is a truss rod adjustment.
I just happen to be playing the Luke, so I just measured it. I recently redid my action. Yeah, it happens to be 1/16 on the low and high e's. I just looked at those two strings. It plays great. I like fairly low action.
I'm assuming that 1/16 IS low action only because, by way of comparison, is other peoples guitars and setups and they're action is usually higher.
I was just pointing out that on an electric guitar, the strings will rattle against the frets. This is "acoustic" rattle, as someone else said, and that does not come out through amplification.
If I was to get rid of absolutely all string rattle at the first fret, I would think the that the bow in the neck would have to be ridiculous...as well as raising the saddles.
I just tried something.... If I pick light, (well, light to me) yes, it doesn't make as much noise. I can even make it not buzz mostly by picking light. Maybe thats it.
I use 2.0 picks and I hit the strings hard.
I have a lot of instructional vids and I can hear the rattling over the voice mics.
I can hear Steve Morses guitar strings rattling on one of his vids. I got a Jimmy Bruno vid and his Jazz box rattles like all get out.