I'm getting ready to drop in the distributor and line it up. Does it matter if #1 is TDC at compression or exhaust to align the distributor? This is something that I haven't done in about 25 years. I just don't remember.
Have you verified actual TDC on your balancer ?
Here is the procedure one of them anyway)
One way for sure to find out - buy a piston stop tool, install it in #1 spark plug hole.
Big socket on crank bolt, spin the engine SLOWLY until #1 piston hits the stop on the compression stroke.
Mark the balancer (the dots on the one in the pic below).
Spin the engine the opposite way, then when the piston hits the piston stop tool again.
Mark the balancer again.
TRUE TDC is exactly halfway between your "dots".
In the example below, it was, fortunately. Balancer timing mark verified!