Bench break in is fine if you don't have neighbors or you've got an acoustically sealed place to run engines.
On the other hand, as long as you don't get carried away you can run in a Fox 35 on a plane without a problem. It might get a little tedious the first few times since it won't start easily, but its not going to hurt anything.
The instructions even suggest doing the break in on a plane in the air. Also when flying the engine in you don't have to worry about heat cycling so much.
I've got 20-some Fox 35's and I've only ever broken in one on the bench, and only then because it wouldn't hardly turn over and I was bored. Only one has had a serious problem and that was because the wrist pin retainers came loose and ate the cylinder.
Besides that, a Fox will typically continue to run better as it wears until it finally wears out. Most of the time it takes nearly a full busy season of flying before one comes into its own. If you do it all on the bench you'll be wasting a lot of time that you could be spent flying, not to mention fuel.
Another thing to keep in mind is this, if the engine is new and has never been run and is that old... It's likely the internals will be goo'd up. It would be advisable to at least pull the backplate and check to be sure the connecting rod is not frozen to the wrist pin. The easiest way to check is to use the short end of a allen key slipped under the connecting rod between the rod and the crank and pull it back while watching the wrist pin end. If it is frozen it could push the keepers out of the piston when it's run which will destroy the liner. The cork backplate gasket might also have developed a set and may need to be replaced after pulling the cover, but at least its cheaper then a liner.
Here's a scan of the instructions for a 1978 Fox 35, the instructions for 1980, 1989, and 1992, all say the same thing. I'm no expert, but it works for me.
Edit: added scan of instructions dated 1978 for reference, and notes...