Well you're not the first person who has heard that. I've seen it posted here before. No idea where it came from, but our goal isn't maximizing timing with the engine freewheeling so it makes no sense. Our goal is to provide the right amount of time in degrees to provide maximum leverage on the crank without wasting a ton of fuel or washing down the cylinders. Also we all prefer the exhaust not to burn our eyes even if we're not trying to meet current emmision standards.
How can we judge maximum power at idle?
The least drop in rpm and/or manifold vacuum when going from neutral into gear will be the strongest. This is a good foundation and will also be immediately useful for at least driving around town.
Initial can be ballparked from here:
Distributor starting point for a curve
The burn is slower with lots of overlap and exhaust dilution at idle. Also not getting the compression of a stock engine at idle. So thats why hot rodded engines often need a bit more initial than the factory cam.
Initial for factory 273 4 bbl (non smog) were something like 10-12 * BTC around 650 rpm. So that's another reference point.
Since you ahve it running at 20* 850 rpm I would make a step by step approach. Reduce the timing 2* to 18* at 850. Then see if the idle mix screws are responsive. If not, reduce the throttle positions. With a 4150 type Holley I would have suggested setting he throttle position first based on the transfer slot exposure. I don't have a rule of thumb for other carbs but they all have a limited range where the t-slot exposure provides good off-idle as well as idle. In either case if the idle mix screws don't change things, the throttle blades are open too far.
For setting the idle mix screws, turn in a 1/8 turn at a time until the engine starts rpm to fall off, then turn back (richer) 1/8 to 1/4 turn. We make it richer because when the engine goes into gear it will need richer mix than when there is no external loads.
If its an automatic you can put it in gear and observe rpm and vacuum drop. if its less than 50 rpm excellent. If its 100 rpm, OK.
Then if you want to try 17* degrees at 850 rpm, or a lower initial rpm, go for it. Keep testing until you are satisfied. Different people have different levels of interest in pursuing tuning.
I think the timing curve your engine will like will be similar to Rick's. Except I doubt your engine could easily be made to run with 12* initial. I expect 14* minimum, and 16-18 more likely. Depends how radical the cam's idle characteristics are.
The timing in gray is basically a factory/MP advance for 273/340 with more initial and the assumption you will be running high octane street fuel.
https://www.forabodiesonly.com/mopar/threads/distributor-curve-help-needed.496183/post-1973532887
and here's the approach I suggest for tuning any non-stock build
Tuning for Performance.