[dan r]

as with any multi piece crankshaft, the closer to zero run-out the better.
attempting to get zero run-out will drive most anyone crazy.

i have always kept at it until it's 0.001" or less on both the pinion or sprocket shaft.
there will be times you may get one side to zero and the other side will be off.
i could be way off with this idea but i have always felt that the run-out must be less than the bearing clearances.

my "guess" is the picture you show is balancing done by someone more familiar with automotive crankshaft balancing.

take a look at the tech archives pages of this forum.
i shown how i have balanced flywheels for over 25 years.

 

[dan r]

the cam cover pinion bushing in your pic looks to be normal depth.
all 54-89 bushings are pressed into the cover like that to provide clearance with the gear nut.
brain fade going on here but 0.200" depth sounds about right.

checking run-out on a friends 68 years ago...

 

[dan r]

after i hit post reply i started wondering about the bushing depth...

oops...

i went out and measured a cover and the bushing is 0.125" deep, not 0.200"
yep, oops...

 

[dan r]

yes, install flush, start drilling for the lock pin, press to full depth and then finish drilling to depth.
press in lock pin and peen the bush to retain the pin...

keep in mind if you replace a cam cover bushing, it must be reamed to size in alignment.

while this pic is an early pan (53 and a different bushing type) the pinion bushing must be reamed in alignment with the pinion bearing bore.
you will also need to do this on yours as well once the bushing is fully installed and pined.
same deal with a cam bushing...
sorry, i don't have a pic of this on a 70 and up engine.