I have done it both ways, but if for some reason, you change props, or forget which end is the heavy end, you could have a vibrating mother. I think its safer to balance the prop, and let it line up any which way. I like the horizontal method myself, but thats just me.

On a slight off topic note, Nelson engines now come with counterbalanced thrust washers. You set the engine at TDC, and line a notch on the thrust washer to 11 O'clock. I was skeptical of these at first, and resisted the switch, fearing I would forget to line it up some day at a race, and it would cost me a heat. I've finally switched all my racers over to these, and lo and behold, have gained 100-200 extra rpms.

I'm suprised a manfucture hasn't started producing something similar for sport engines....

Could be a new cottage industry.