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For touching off I use a 1" gauge block, and have never chipped a tool. I jog up until the block slides underneath, the down .01" and then up by .001".I use air blast to clear chips. Tried coolant, and it was messy.
Hugh, the way I understand what you wrote is the tool is lowered until it touches, ( the way I do it). I understand the way KVOM does it, he raises the tool until it just touches. The difference is which way the backlash is taken up. On Most CNC systems this is not an issue, but I'm finding it is on mine.maury