In the "Star Trek: The Next Generation" Episode "Angel One" when Picard gets sick is Laforge really the next highest in command to take control of the ship? He wasn't even chief engineer yet? Why was he chosen?
In seasons 1 and 2, LaForge was the conn officer (helmsmen) and a junior bridge officer. Early in the series, the producers appeared to pay more attention to the officer's division (uniform color) than they did rank. As a result, he was given more command authority than other officers not stationed on the bridge who out ranked him. Data was the only exception to the division, but he was designated as the 2nd officer, and thus was 3rd in command.
It was never named (in canon) who was officially the 3rd officer of the Enterprise-D (even in later seasons), but in Seasons 1 and 2, it was LaForge who had more on-screen time in command than anyone else other than Picard and Riker. It is not an unreasonable assumption to make that LaForge's status as the highest ranked bridge officer in the command division (after Picard and Riker) made him the 3rd officer of the ship, and hence would be in command if Picard, Riker, and Data were unavailable.
You can see this in "Arsenal of Freedom" when Picard apparently decided he needed every senior officer on the planet with him, and left LaForge in command when he left the ship, despite others on the ship being of higher rank.
I believe this is similar to modern naval traditions in that bridge officers will fall higher into the command structure than non-bridge officers.
At the start of the show, Geordi appears to be one of several duty engineers on board the Enterprise with Chief Engineers Argyle, McDougall and Logan outranking him in the earliest episodes. After Argyle was disposed of by the show's Producers, the decision was evidently taken to make Geordi the highest ranking engineer on board and then to make him the sole Chief Engineer from Season 2 onwards.
From that point, the ship's command structure became pretty stable;
Picard > Riker > Data > Laforge > Worf. The fact that LaForge outranks Worf seems to be based on the longevity of their rank and his position as Chief.
Note also that that after he was announced to be Chief at the start of Season 2, LaForge was generally the 'captain of his own ship' as far as Engineering was concerned, giving direct orders to everyone below Riker.