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I prefer to set my Dob up so that it is level and pointing at True North. That becomes the 0/360 degree mark for the Az setting circle. Then I test it against some obvious targets and compare the setting circles (Az & Alt) to the figures given on my iPod's Sky Safari. Even though the Dob is a GoTo model, I can use it as a push to and the setting circles make life easy.
I use a sighting compass, so that makes it easy to get with 0.5 degrees of True North. It will be a little harder without this feature on a compass but it is still possible to achieve reasonable accuracy.
Your method sounds fine as well.
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