At work we had a few jobs that required finish machining of
"Precision Cast Bevel Gears". The "precision" of those gears comes from
a ridiculous amount of free running backlash in the cast teeth of those gears.
None the less, that is what you need to set up to.
Common scene tells you to grip on the big end with the smaller end inward to the chuck.
It looks safer, but you are still just chucking on points no matter which way it's chucked up.
We would set it up the opposite way at the edge of the chuck, narrow point out.
Indicate the teeth round as close to the chuck as possible then move out to the narrow end.
Bump the gear in or out to get that end running round. Now the back side is out again so you
move the indicator back and re-indicate it using the jaws. Move back up to the narrow end and
bump it round again. Back to the jaws... It's going to take some time and patience to get it right.
You might go back and forth 20 times before it's close enough.
As kf2qd said, in a perfect world you would to indicate to the pitch diameter of the gear and everything
will be perfect. Unfortunately that is an imaginary line that you can't put an indicator tip on.
The best you can do is indicate to the OD of the cast teeth and hope they are accurately cast to
that imaginary pitch diameter line.
Rick