Flehto's procedure is perfect. It is ideal according to some to line up the back of the fence with the back of the breech, but not possible with all combinations of parts and not at all prevalent on originals, either, as far as I can tell. Don't file a groove in the breech unless you have to, certainly not just to satisfy an arbitrary design instruction!
One additional note. If this is your first or an early attempt, consider locating the touch hole center a little bit more forward, so that you can accommodate one size bigger liner, at least. I, for example, leave room for a 3/8" liner even though I only use 1/4" -- that is probably overkill, but it means that I can fix a boo-boo with a bigger liner, either at the time of construction or later on without running into the breech with a bigger hole. The extra 1/16" hasn't caused any problems, and I can go through two more sizes (5/16" and 3/8") before running into any conflict with the breech face.
PS. RE: lock bolt at rear of bolster. That can be a problem, esp. with the short bolster on the Bailes and Egg locks (the stirrup requires clearance). As long as it is a good hole, it will hold, even if it is close to the back of the bolster -- I don't think you'll have much choice, anyway.