When an engine is at top dead center, should the intake and exhaust valve lifters for cylinder #1 be equal to each other in the length they are sticking out of their bores ?

At #1 TDC compression, both valve should be down in their bores. If the cam is installed straight up. Both lifters will be up slightly and level at TDC exhaust. If the cam is advanced or retarted the lifters will not be exactly level at TDC exhaust.
Doug

6Pax,
Just remember, if #1 is firing then both lifters will be down at the bottom.
If #1 is on the overlap stroke (one crank turn from firing), then the lifters may be slightly off the bottom, and may not be perfectly equal (but close).

Very long duration race cams may make things close as the cam ramps are long.

@ TDC overlap, the intake and exhaust valves may be open symmetrically (equal degrees from TDC0, or not. Timing the cam to split the overlap duration may not be the best setting.
They may be open the same amount, or not.
A very small or very old cam (pre-WW2) may have almost no overlap.
Don't assume anything with an unknown cam.

If the cam is a symmetrical (same lobes on both intake and exhaust) grind and installed straight up they should.
I have seen, I think, dual pattern cams with more duration on the exhaust lobe have the same valve lift at TDC when installed straight up, no advance or retard on the LSA
I was taught by some old time cam grinders and racers that installing the intake lobe advanced would help the bottom end, retarding it would lose bottom end and gain upper RPM power. I have tried doing that on the local Studka engine dyno years ago on one of my bracket stroker motors with a solid roller camshaft with a Jesel belt drive, didn't really see a significant change going to 3 degrees LSA either way

"3 degrees LSA"
Unless the engine is DOHC with twin cams, no change to the LSA is possible, it's ground into the cam. Advancing or retarding a single cam always moves both lobes at the same time and the same amount.

Yepper, I should have stated moving the LSA 3 degrees from straight up either way didn't make a noticeable difference on that motor that day

"A picture is worth a thousand words". go to utube & look this topic up & it's show you exactly what you are looking for.

[align:left][/align]

The piston / balancer can be at TDC in two different camshaft positions. If you are seeing two different lifter heights, you need to rotate the crank another 360°and re-check, or you have a cam with two different lobe designs. This is assuming a healthy engine. Any lobe or lifter wear (or different brand/mismatched lifters)will show the same results.

I took a break but I am trying to finish this up today. So, I have the #1 piston (and #6 of course) at TDC. I have the crank gear dot at 12 o'clock and the cam gear at 6 lined up. The #1 lifters are slightly offset and the intake lifter is slightly higher and on the rise on the cam lobe. #6 lifters are even with each other and slightly down in the bores. So, if I understand this correctly, #1 is on the exhaust stroke and #6 is on the compression stroke, correct? If so, then to install the distributor I should rotate the crank 360 degrees so both dots are at 12 0'clock, put the oil pump gear in so the slot is lined up from the front of the engine to the rear and then install the distributor and set it up so the #1 plug wire is on the cap over the rotor. Do I have this right?

Wrong on #6, it is on the firing (power) stroke and #1 is in the overlap on the exhaust and intake strokes.
You should degree the cam based on the #1 lifers not being equal heights

There is so much contradictory information on the internet it just makes things all the more confusing. I read several different timing related postings and articles that said that with the cam gear dot at 6 and the crank at 12 (both pistons at TDC) that the #6 piston is on the compression stroke and #1 is on the exhaust stroke and to rotate the crank 1 revolution so the cam gear is at 12, then set the distributor on #1. But, based on what you are saying, I should set the distributor on #1 with the gear dots at 6 and 12 as I have them, not 12 and 12. Is this correct?

“Dot to dot” should be cylinder 6 TDC firing-> you can point the rotor to #6 cap terminal. Or rotate the crank 360° and point the rotor to #1 tower

When the crank timing gear is at 12.00 and the cam gear dot is at 6:00 o'clock your cam is in the overlap position finishing the exhaust stroke and starting the intake stroke on #1 cylinder so both lifters are opening and closing the valves. #6 cylinder, piston, is on the power stroke so you set the distributor so its rotor is pointing at the # 6 spark plug terminal to fire that cylinder.
IHTHs

What the valves are doing during overlap, and how to set the distributor rotor, are 2 different subjects.

leave it dot to dot
mesh the gear in
when installing the dist. drop it in so that it is pointing at #6 (180 out).
now set the damper to 10-15 before then line up magnet to reluctor ridge by rotating dist. housing and fire it up.

^^^ this. actually you can mesh the dist gear anywhere but lining the gear slot up so the rotor is pointing diagonally opposite #1 (toward #8) lets you keep the plug wires in the OE order. (not a dealbreaker but allows the shortest length of plug wires & makes troubleshooting slightly easier (every little bit helps). RR

What I meant was: finding TDC for spark purposes is exact, only one answer.
The relative positions and events of both valves during overlap varies widely, and has nothing to do with spark, except being roughly 360° away.