How do actually use the dial gauge? Is the following correct?

I've got the FSM and it looks like a magnetic base sticks to the hub.
Then you place the gauge on the edge of the spindle that protrudes from the locking nut.
The FSM says a "2 mm pre-load" which I take to mean you compress the indicator first so the resting position is actually spring-loaded so it can travel plus and minus.
You then wiggle the hub/rotor assembly, check indicator travel, then repeat after rotating the hub a few times.

It looks like you can do this with the caliper attached, but the pads removed, correct?
Do you measure un the same position each time, or take a few different spots, like 10, 2 and 4 o'clock?

Is the $20 /set Harbor Freight gauge set-up accurate enough? It almost looks like with this set up you'd need to adjust it to no play whatsoever, or only one-half of one increment on the dial?

I put off using the dial gauge test for bearing adjustment and was going to defer to a mechanic because the Northern Tools set was $130 and was too much for a limited use tool; but at $20 it's a different story.