Fret the first fret when checking string action?

There should be a small gap at the 8th fret when the 1st and 14-17th are fretted. Enough to see a small gap between the string and the fret. I believe its around .1/128" or 0.010 inches with a feeler gauge. I generally judge by tapping the string and then adjust slightly based off of fret buzz. If there is no gap or the gap is quite pronounced, the truss rod needs adjustment. Generally speaking a flatter neck or even a neck with a back bow will buzz on the lower frets, and a neck with more relief would buzz more in the middle of the neck. Yes, you are correct. That does NOT address fret dressing/leveling issues and other disappointments / nightmares with dried out fretboards causing raised fret edges. Leveling can compensate for a slightly warped neck.
I used to measure, but now I tap the middle and listen to determine proper relief for my setup. Usually ends up somewhere around 7 - 9 thousandths....
 
I used to measure, but now I tap the middle and listen to determine proper relief for my setup. Usually ends up somewhere around 7 - 9 thousandths....

This is the method I've used for some time now; I use a capo on the first fret, straighten the neck until tapping mid-neck anywhere from the 7th -> 10th fret frets out/goes dead, and back off until I can tap and hear changes while tapping different frets mid-neck. I then go by feel and tweak as required (but rarely need to, or just very slightly).
 
I do everything by feel on my guitars. These "rules" don't apply.
Do what works for you, for sure. I go by sight and feel when that's the only option available, and the results are usually very good. But that depends on the state of the guitar you're working on. So I measure whenever I can. (I approach tuning the same way — only go by ear when you have to.) With a couple of good straight edges, a set of feeler gauges, and a truss rod wrench, you can tell a lot about the state of a guitar neck, what its quirks are and where they lie on the fingerboard, and what compromises will optimize the guitar's performance.
 
The Suhr setup video describes it best. Feel should be how you judge it when you have it how you like it, but then it is a good idea to quantify that with a few measurements. This way when you apply your set up to another guitar it can act as a good starting point.
 
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