I guess each player has a preference to where they want the bridge. A LOT of guys I have noticed make the trem only push down, basically a hardtail that will drop a little.
Here is my preference. If I have a tremolo, I prefer a whole step up on the G and B strings when pulled. Most of you guys know I play a Telecaster with benders. This gives me the ability to use some of those sounds with the tremolo. You know they are not just for country anymore and actually started with the Byrds.
To do this on a vintage strat, I have 2 now. Neither have string trees as these were replaced by using Hipshot Staggered Vintage Locking Tuners. These keep the nut angle break at over 7 degrees, which is needed.
I do not block off the tremolo.
First thing is to insure the holes in the tremolo are large enough to not bind the screws. Callaham bridges normally do not have this problem. The newer vintage fender tremolo, I had to drill out some.
The following instructions I got from John Suhr on the Suhr forum. John was one of the original Fender Custom Shop guys and a Suhr Guitar was the first tremolo without a locking nut that I found that you cannot knock out of tune. So I posted the question on how to setup a Fender 6 screw vintage and this is what he said to do for full floating whole step pull.
1. I use a caliper to measure a stack of post-it notes. I get .11, just shy of 1/8th inch.
2. I remove the paint where the tremolo will contact the body. Exacto knife, rectangle cut. Light chisel at the inside edge and it will usually pop out in one piece.
3. Install the tremolo with the post-it note pad at the rear edge of the tremolo with the glue up and away, no need to stick it to the body, and put the 2 outside screws in and tighten until they just touch the bridge, but puts no bind.
4. Put all 5 springs on and tighten the claw so the bridge tail is tight against the post-it note pad.
5. Lube the nut and put on the strings and tune, the tremolo will not move since the resistance of the springs are more than the strings.
6. Set intonation and make any setup needed, unless you need a neck shim. Should do this first.
7. Install the other 4 screws until they just touch and back back off 1/4th turn or more if you want. Since this is a Callaham it should have hardened screws.
8. Then I remove the springs I don't need. I use 3. One in the middle and 2 outside. These are all straight to make an even spring tension.
9. The bridge will still be holding down the paper if you tightened the claw and the guitar will be in-tune and setup just like a hardtail.
10. Loosen the claw until the paper pad drops out and you are done.
Works with a nickel, a credit card or whatever you wish. The pad thickness gets it very close to a whole step pull. If you need a little more, loosen the claw a touch. Too much tighten it, but you will be very close.
If it is a half step pull you wish, simply do the same thing. Just before you start, tune up and see how thick a stack of paper you need for a half step. Just use a tuner and add or remove paper until you get what you want.
I find I need to tighten the claw more a tad at an angle to get exactly what I am looking for, but this is where the differences are.
Finally I put a little stiff spring in the screw hole for the tremolo arm so it will stay in-place without it having to be completely tight.
After I did them this way I can dive bomb, hold the guitar up and shake this crap out of the bar and it stays in-tune. Always returns to tune and will if nothing can bind it in any way. These all have traditional bone nuts, not LSR rollers.
BTW, seems like a lot of players get weird when mentioning removing the paint under the tremolo. You do not have to do this, if you use the tremolo a lot it will remove the finish or part of it. You just may find it a little loose, but all you have to do is tighten it a touch. All are different. Just like Eric Johnson removes the paint under his pickguards, even on his originals. Feels the resonate better. I am not Eric Johnson, so my guitar will become worth less if I do this improvement.