Ace,
There are two commonly used techniques for setting up ring and pinion gears. One is the appearance of the drive and coasting tooth contact patterns and the other is the Master Housing Depth or MHD method. Advocates of a particular approach have an almost a religious loyalty to their preferred method.
Each approach has its advocates and detractors. The tooth contact pattern approach usually will find as many opinions about shallow, deep, loose, tight as you have people to look at it. The problem comes from the subjective quality that visual appraisals of the tooth contact pattern before your eyes (or theirs) are subject to.
The MHD approach uses a Master Housing Depth dimension from the differential carrier bearing center to specific location on the pinion gear to set pinion depth. This dimension is the same for all rear ends in a given family i.e. Ford 8.8 inch, Ford 9 inch etc. Once you have pinion depth set you can easily zero in on your backlash dimension using shims on either side of the carrier to get you where you need to be.
The MHD approach requires no subjective visual evaluations everything is measures in thousandths of an inch. The drawback to the MHD approach is you need to be able to read a micrometer and you will end up making a few pieces of simple tooling to do the job. BTW, MHD is the way Ford sets up the rear ends before they leave the factory.
In the tooling department you will need a case spreader. and a 1" thick plate for measuring pinion depth (I provided a drawing below) along with a dial indicator and stand for measuring backlash. I have attached pics of case spreader and a drawing of the plate for you to duplicate. The case spreader can be bought from Rotunda for lots of money or fabricated from plate, bar stock, dowel pins and a turn buckle form McMaster-Carr for lots less money.
Case Spreader
Pinion Depth Plate
The third item I wanted to attach is an excellent write up on setting up rear ends using the MHD approach for Chrysler, GM and Ford rear ends by Randy's Ring & Pinion but the pdf file exceeds the site file size limits so instead I will provide you the url to down load it from.
Click here =>
Ring & Pinion MHD setup for the booklet. This used to be a nicely printed pdf but the visual quality appears to have deteriorated a bit in recent years. The important thing is the information is still correct and the pdf is downloadable.
Just in case you are one of the folks that embrace the reading of the tooth contact pattern method for setting up rear ends but don't know what to look for in terms of tooth contact patterns, here is the link to Dana's tooth pattern guide, click here =>
Dana Tooth Contact Pattern Guide
By far and without any doubt whatsoever, the absolute quietest, longest lasting rear ends I have had over the last 40 years were the ones I set up myself using the MHD method.
Ed