When fully broken in... with the plug out... and the motor cold... you will feel a very "slight" pinch at TDC... not much at all. When turning on the high speed needle go in about 1/16 increments or if you have trouble picturing 1/16 Make believe the needle is a clock and adj 1 hour at a time
Yes, during breakin the piston fits itself to the sleeve... so you will see a small wear band on the piston... this is normal.
1/3 to 1/2 gallon sounds more than enough... I generally only go through about 1/4 gallon then I lean it out and go racing