Setting your timing when the engine is reving at 1600 doesn't mean initial or final advance. Remember your distributor and ignition system will by design change your timing (advancing) as engine RPM increases. You are just picking a point along the "curve" if you think of a graph drawn to represent this.
When you are done setting it, put the engine idle speed back to spec.
Be careful around the fan too with this operation. It's one of the few jobs to do with the engine running and the belt waiting to grab loose clothing.
On the recent ignition systems (1996 forward with OBD II), engine timing is controlled by computer, and in some cases varies wildly as dictated by knock sensors, air flow O2 sensor data. There's some fairly sophisticated engineering going on with this to find the right blend of performance and emissions.
On the older models its a lot simpler and you have control.
If you are interested in some of the computer control stuff check out: www.obdii.com