Keith,
I had that clipping in my Davis Instruments folder, so I at least know it related to that. Since I have the VP2, it was most likely specific to it, too. Beyond that, I don't remember where it came from...
Yes, the screws would be adjusted to agree with the one inch of "rain" you've poured in. Raise the screws if under-reading, lower if over-reading. I remember reading that you should listen to the clicks during tipping. Most likely one bucket will tip sooner than the other. To increase your reading, raise the side that has the longer wait (time to fill) to balance them out. Lower the shorter side if your gauge is over-reading.
Make sense? Click............click..click..........click..click......etc. Both sides should take the same amount of time to fill and tip.
I see your logic on the 12%, but I'm not sure if I agree with the amount to adjust for it. 12% of the 100 tips it takes to read 1.00" is 12 tips. You'll need to adjust the screws upward so that the theoretical 88 tips you are getting now increases to 100 tips. I don't know where I going with this, but two full turns seems like a LOT for such a fine adjustment. Each side only has to increase 6 tips per inch to get to your target. I'm not sure, but I thought I remember people talking about making 1/4 turn adjustments.
I'm rambling....