Am using an older stock bellhousing on a 72 small block, checked alignment & it came out to be .012" off center (.024" total reading). Is this OK or should I get offset dowels? Know the manual says something like .005 max but is this overkill?

Yes it is... Try to get it a close as possible, under 0.004; be sure you are taking good measurements, and the bellhousing is TIGHT to the block... I have had a LOT of trouble getting stock AL ones in alignment and end up squaring them up on the mill before I even start - most of them are bent or out of square which causes all kinds of problems when you try to do the alignment...

Using an iron bell. Got 3 repeatable results using different dial setups. Only tightened the bell bolts to about 15 ft-lbs. For the heck of it I'm going take off the bellhousing & reinstall & then torque all the bolts & see what comes up. Anyone know what typical readings are, especially when mixing bells & blocks that didn't come with each other? Maybe I'm worrying too much, .012" doesn't sound like a heck of a lot.

Yes, it is too much and needs to be corrected.

R.

Reinstalled bell & torqued all bolts this time & this time did slightly better at .011". Guess I'll be getting some offset dowels! My luck it's right between the avalable sizes (.007 & .014). I'm doing the setup with just the crank in the block, looks to a pain to do with the engine in car.

Did you ALSO check it for parallel to the block/ flywheel? The way you do that is to attach the indicator to the flyheel, and the probe on the transmission face of the bell, and check that way.

THAT was most of the problem with my old '70, and of course I didn't find that out until I'd had it awhile, it was always hard to shift. Wore out pilot bushings fast