How to set up ignition timing?

Just so I am clear, you are looking to just install the distributor? If so here is a guide that will help:

https://www.youtube.com/watch?v=El1H0_6IYxQ

This is a Chevrolet but it gives some good info on how to do it.

Below is the process from the manual that gives the step by step. However, if number 1 is on TDC of the compression stroke then you need to identify where the number 1 plug is on the cap and then just set the rotor to be pointing at this position when it is installed.

Please let us know if you have other questions. Thanks

Yes. The timing marks will put you on TDC of the compression stroke. However the rotor pointing at number 1 post of the cap only aligns the ignition system to fire on the compression stroke.

The distributor is going to fire whichever plug the rotor is pointing at and we want the plugs to fire on the compression stroke. So we need to set number 1 on TDC (align timing marks) then we need to coordinate the ignition system to fire at the right time as well which is done with pointing the rotor at that cylinder when installing the distributor.

So all that to say, you are correct but I just wanted to clarify that for anyone who reads this in the future.