My own preference is to set the valves with the engine not running as I feel it’s more accurate as well as not beating up what could be a good set of feeler gauges.  Here’s the link to a past thread which discusses different methods for adjusting the valves.

http://forums.y-blocksforever.com/Topic8614.aspx 

Do you go below .019......as in .017?

The racing applications prefer the valve lash adjustment to be on the tight side as this simply increases the camshaft duration which helps the peak power numbers.  I’ve found that 0.015” is the low side for a high performance setting as lash adjustments less than this tend to have some top end misfiring due to the valve train heating up at high rpms and full throttle.  For the street drivers that have upgraded or longer duration camshafts, overall drivability is better with a looser lash setting as this helps low end manifold vacuum and carburetor signal attributes.  As a general rule, 0.019” lash is a good place to start in most applications where the recommended lash value is unknown.  Some of the wilder cams being used on the street tend to have fewer drivability issues with lash settings in the 0.022”-0.025” range as this reduces the amount of overlap and increases the manifold vacuum in the lower rpm band.