You need to find where the bullet just touches the lands, there is a ton of different ways on doing this. (Using a oal gauge, fired case partially sized, fired case with a cut in the neck, using a match to blacken a bullet, ETC)

The method you have described people have used it.

Once you have found where the bullet is touching (Not jambed) the lands you can measure from the ojive of the bullet to the rear of the case. (As long as your using all the same brand of cases) Then you set your seater to reproduce this measurement. Now that you have the base line set you can move the bullet in or out to find where it shoots the best.