I agree with opening to one side and I always cut each end first then hog out the middle using the technique you described, keeping the chisel cutting on 4 sides or just front and back but never on 3 sides to avoid deflection.
I guess with deeper or through mortices, the three-sided hogging technique might be better but I have never had an issue with chip clearance.
As for set up, I fix the chisel with a small gap so it isn’t fully home. Set the drill bit so it touches the chisel then push the chisel fully home creating a gap between the chisel and drill bit.
IIRC, the drill should be level with the chisel tips.
I also found the hard way that it is a good idea to wear gloves during the setup as it is easy to stab yourself on the chisel which is (should be?) very sharp.
