When I began racing/running .12 Novas, I received great advice from local racers, asked questions & did a lot of research like you are. Buying/having access to a Flow meter and keeping a journal to document weather, engine set-up, carb, pipe, prop, fuel, etc. really helped me with the learning curve & frustration little engines can present. Wanted to pass that on to you, i don't know your experience so don't be offended if you already know these things. My needle settings are all based on my flow meter readings, not actual needle turns, so it's hard to say where you should start. I looked through my notes/flow meter #'s & would guess I was 2-3/4-3 full turns open on my needle. Try closing needle all the way & open it 3 full rotations to start with. Fire it up at half throttle and see how it runs. Is it slobbering rich & full throttle won't clear it out/increase the rpm's? Then your safe and can adjust it from there to keep it running. If it starts and revs up/has immediate throttle response & little to no fuel coming out of the pipe your too lean. Shut it off, richen needle and restart it. No water cooling is usually needed, fuel is coolant & provides enough lubrication when needle is rich enough to keep engine running at low-mid rpm with the carb 3/4-fully open & you see 180-200 temp range. Find a needle setting that lets engine build heat around 180-200 degrees at a low-mid rpm and run it in the boat on land for a several tanks. Then you can take it to the lake to continue & finish break-in. Biggest no no's are building engine heat by leaning engine, sudden rpm increases early on which can skid the bearings, and premature leaning of needle to "speed up break in." It takes a gallon or close to one before the engine loosens up, makes power, & is ready to tune for performance. For the next several gallons the engine will get faster/stronger and you will have a long lasting less fussy .12 engine! Sorry for the long winded post, I want you to have success & enjoy your JAE 12 like I continue to do!
Brian Neumann