Joe@TRFC, this is an area giving rise to a great deal of confusion. The ball carrier (as Browner notes), is perfectly entitled to go to ground in a maul - but that's not quite the same as saying that he is entitled to pull the maul down with him. So I have no worries about your call of "Keep it up!" - it's a call I routinely used myself. It requires the participants to keep the maul upright - not a requirement on the ball carrier to keep himself upright.
There are at least two reasons why the BC might be coached to go to ground. The first stems from the day they changed the law to introduce a different outcome to an unsuccessful maul compared to an unsuccessful ruck. The unsuccessful maul restarts with a turnover scrum, while the unsuccessful ruck restarts with a scrum to the side going forward - often the BC's team. So coaches persuaded their players to get to ground in the hope of converting the maul to a ruck. This logic, if it ever actually worked, is now flawed. The maul remains a maul, even when on the deck, and ends successfully only if the ball is immediately available to be played.
The second reason is that a player's dead weight in attempting to get to ground may be enough to break the hold of oppositions wrappers. This is fine - but it carries a risk. If the oppo keep hold but can't support that weight, resulting in them going to ground, the referee may determine that the maul has been destabilised by the BC attempting to go to ground, and he may be pinged for collapsing the maul. In that case, your action of penalising the BC is correct - though it can be a hard sell sometimes.
You mention that you tell the BC to release the ball when his trailing knee touches the ground. I suspect your rationale for this derives from Law 15.3:
[LAWS]15.3 BROUGHT TO THE GROUND DEFINED
(a) If the ball carrier has one knee or both knees on the ground, that player has been ‘brought to ground’.
(b) If the ball carrier is sitting on the ground, or on top of another player on the ground the ball carrier has been ‘brought to ground’.[/LAWS]
The difficulty is that mauls are covered in Law 17, and 15(2) is clear that a tackle and a maul cannot co-exist:
[LAWS]15.2 WHEN A TACKLE CANNOT TAKE PLACE
When the ball carrier is held by one opponent and a team-mate of the ball carrier binds on to that ball carrier, a maul has been formed and a tackle cannot take place.[/LAWS]
The basic tenet of a maul is that the ball can be played with the hands. We see no clear requirement that a player off his feet must release the ball - though many refs infer that from a statement in the definitions to Law 14. In short, it's a mess.
For me, the way to navigate the mess is to try to keep the maul upright; be prepared to PK a ball carrier whose attempts to go to ground clearly caused a collapse; but otherwise to look for an immediate availability and if it is not there, award the turnover scrum for the unsuccessful maul.
Good luck!