Hi Scott,
yes most definitely your theory will work, albeit very difficult to get spot on with a compass.
Given your setting circle is fixed, go through the procedure you've described. This will get you close.
At that point you'll need to find an object like I described, check the true azimuth setting and work out your error. e.g 2 deg west, or 3 deg east.
At that point, you would try to carefully turn your base assembly to compensate for that error.
Recheck from the beginning.
This might take a couple of iterations, but you should get there in a few minutes.
Percerver with the azimuth circle and get yourself an Inclinometer for Altitude if you haven't already - you can pick these up cheap on ebay.
Once sorted, finding targets will be much easier !!!!
Paul
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