Hi Dan,
As far as your first question goes, it's tricky:
If you saw the letters in Photoread clearly, then you did it right. When it came out further, then it could be one of two things:
1) You crossed your eyes
2) You diverged them correctly, but when too far to let the picture work.
The second one is easier to explain when you look at something like a shopping cart (I did this as a kid, and someone brought it up recently) or through a chain-link fence. If you diverge it, the two links side by side will make one, and it will pop out. But if you can go further, you'll get links that are a link apart to make one, and it'll be closer. Here's a pic:
Now, it won't really change colors (blue + red = purple) I just did that so you can see which ones are merging.
How does this apply? Well, in a stereogram, this will destroy the image, and you won't see anything, EVEN THOUGH you're doing it right, just too far.
In Photoreading, they say keep about an inch, though I just go further and make a huge blip page sometimes. The real point is to make the viewing area larger, and it also helps to make you not read the words consciously.
You said you're not sure if you're crossing your eyes. This is where both tests come together.
A stereogram, if properly viewed, means you're diverging, which is correct; but if you diverge too far, you won't see the image and will be confused.
A blip page will tell your eyes have diverged a lot, but it won't tell you if you're actually just crossing your eyes. See what I'm saying.
I know this may be a little confusing for an explanation. Let me know if it is, and I'll try to reword it.
-Ramon http://razor.ramon.com ("I'll be looking at the moon, and I'll be seeing youuuuu" - the song of photofocusers)