I'm no expert. Although setting up loose certainly reduces temperatures, the better approach is to run it in (e.g., on a street car if available) to wear down all the high spots. On how much is too loose, you'd have to consider that although looser reduces friction and heat, it also leads to higher shock forces due to the abrupt take-up of clearances. If the diff has more strength than you'll ever use, then loose is probably best, but if the diff strength is marginal in your application, you might want to stay a bit tighter and do something else to reduce temps (i.e., run-in, special lube or additive, diff cooler, etc.).