Joe Ed,
That sounds just right. As long as you can swing the rod all the way around the piston while twirling the rod about its axis, and it never binds up, then it is not too tight. I don't shoot for zero slop--that is too tight and will cause things to hang up. There needs to be some gap just for the oil.
One way to even it out is to rotate the setting tool several times while you are resetting it. Once for each time you strike it. Then the socket doesn't seem to get pinched more on one side that the other and the rod will twirl and swing more freely. And keep the axis of the tool perpendicular to your work surface!
A too tight fit will cause the engine to be very draggy and slow until it gets broken in again. It will eventually loosen itself up again if it wasn't pounded solid, but no need to cause that much work. The racing motors seem to run the fastest with the looser rods--until they let go and the top end gets junked.
I am not a proponent of using the anvil base that comes with the tool. It's ok if you must reset the rod while out at the field, but I prefer to set the piston down directly on top of a granite surface plate or on the ground surface of a machinist's knee. It is flatter, and you need the mass anyway to strike against. The counterbored hole in the anvil provided with the tool doesn't do anything. It is not preventing the piston from growing in diameter, for example. I have never encountered a "mushroomed" piston.
If you ever take apart a Cox and see a dimple on the top of the piston look for a loose rod. Chances are it has been pounding away inside the socket and is about to break thru.
The Venom pistons were the least robust. They tried to go thinner and sometimes the crown of the piston would come off. I've seen one like that myself.
The Medallion is a great 1/2A engine. I hope yours lasts a long time. Good luck!
Dave
PS--While you have it apart, you can also check the cylinder for varnish. If it has a brownish cast to the surface, then you are probably a little gummed up. You can use a stainless steel wirebrush that looks like a pipe cleaner to spin around inside and get that out. Don't use abrasives or you will ruin the fit.