Seriously, it's a bit hard to tell what you're doing from the way you've described it.
The first method does leave the needle floating in the air. The second seems like you're double-applying tracking force: set to 1.75g and then 'set tracking force'.
Assuming you want to use the tracking force dial, then you'd set it to zero, move the counterweight until the arm floated at that 1mm distance, then set the desired tracking force with the dial, double-checking with the gauge you apparently have. There seem to be two very similar threads here at the same time.
The rough rule of thumb is that once you approach the specified tracking force you'll be OK and can apply substantially more force without hearing bad effects. Much less than spec, however, will not produce good sound.
I don't know the current Rega instructions. I thought the systems with cartridges installed had their setup already done. You might want to get on the phone with your dealer.
Rega RP3, TTPSU, Groovetracer delrin, reference subplatter & counterweight, Lim double pulley
Shelter 501-II with Soundsmith Level II, Heed Quasar