It's done, the engine is set at 0.85mm exactly. The car is much better now, ill explain soon.
Now i will explain what i did, the changes and the current situation of quite a bit of remaining issues 
You have helped me a lot! Now i've gained confidence with working with diesel systems Thank you for the detailed guidance.
Part1: What i did. If you are a random future forum reader, dont do this, go to the sticky about IP timing!
When i set the engine "by ear" it was at 0.75mm, and the car seemed a bit better than now (will explain below, but a bit less smoke at high speeds and seemed a bit faster, probably has to do with something else)
What i learned from trial and error is that there is another way to set the timing (not going to say its the best but it was to my liking), using no special tools. I tried the forum method and it is certainly good, and the best with the right tools.
I didn't like the dial indicator because it was either sticking a bit or moving a bit, not exact to the point of 0.05mm actually. And i hated breaking the camshaft bolt loose.
So i tried "my" method. You dont need tools, but you do need a helper
I jammed a phone deep inside the engine bay so i can see the bellhousing through the camera, excellent view from these new fancy smartphones. Still worried if i missed a tooth here due to angles (i tried very hard not to and i dont think i did)
Took the valve cover off. Nasty silicone there
I loosened the pump so i can rotate it.
I used VERNIER CALIPERS instead of the dial indicator. But carefully! First of all, since the pump is open you must care about dirt and debree. The depth probe goes into the pump plug hole, and the caliper rests on the flat surface for the plug bolt. The pump has a small hole in the middle - deep inside, so the depth probe of the calipers can be tightly inserted into the hole (use quality calipers with ground metal probe with a small notch at the end, not that wire useless type). Then the helper turns the engine as i check the reading (constant pressure on the calipers), very easy to read and find everything. He has to stop from time to time so i can read the exact meas.
Rotated the pump as needed.
Check again. Spin the engine a few turns and recheck etc. All is well.
Assemble and end.
Double checked with the dial indicator, its good but all i know from it is that its between 0.8mm and 0.9mm. (i used quality indicators btw).
I will loosen the hardlines so they can relieve if there is any tension.
btw i cranked the engine without the pump screw (glowplugs off) to spit out if there was any dirt. Not sure if it was smart but i did it every time and seems ok.
Part 2: changes and issues
The car runs much better now. Much less smoke. Much less stutter on acceleration when cold (although it was smoother at 0.75mm).
Issues:
Smoke. Much less - almost 0 smoke at idle, little smoke when revving stationary car (gray), quite a bit of smoke when going 80+ kph and hard accelerating (gray-white smoke).
Top speed is now maybe 120kph (was a bit easier to reach maybe when at 0.75mm) NOT AT ALL EASY TO REACH
Acceleration. Car accelerates quickly to 50kph, than a flat spot that takes really long until 80kph and then after considerable time i can reach 100kph and after even more time 110kph and eventually almost 120kph. My speedo is precise btw. And when doing that, 90+kph, a lot of smoke (white-gray)). And smokes (gray-white) at acceleration. When under pressure and in higher rpm it smokes like that.
Not really gaining
rpm as smooth as i thought it would when accelerating. Probably subjective. Not visible on video.
Still a bit of
stutter when cold accelerating in 2nd gear with lower revs. Also was less at 0.75mm a bit.
Starting. No CS device. We know it has very low compression, but even in these warm summer days i have to pull the lever of the CS to start. And use glow plugs for around 10s. I have the fast starter. Starts excellent without glow plugs when warm.
Still
wont pull uphill and looses momentum as if i was towing a very heavy trailer. Almost no changes here. (3rd gear impossible on moderate hills - unless i accumulate a lot of speed before)
Maybe all this is due to low compression?
Remaining jobs:
Valve timing. Soon the parts arrive.
Fuel screw (it was set by ear by me, so god knows, the mileage is okay, not spectacular tbh but good (around (+-0.5l) 6l/100km when going 80kph))
Service - hoses, hardlines (atleast one), filter...
Install a copper washer on pump plug as ofc it wasn't there
Im thinking of making a manual cold start device operated from the inside, will post it here if it turns out okay. Do you have any ideas or suggestions?
Loosen the pump belt as the mechanics made it tightt
What kind of video should i film?