The high torque application is not to set the bearing in the race, but rather to set the race (the cup) into the hub securely. It need only be done if the race is removed, it should ALWAYS involve rotating the hub while torqing the nut, and the seal should NOT be present for that operation. As you can see, it won't take it.
I very much do not like the way the TMs are written for setting the rear wheel bearings. I also very much dislike the large amount of interference in the aftermarket replacement seals that are available. They take away any "feel", and leave you to rely entirely on a vague and unclear technical manual. That lead me to do a little bit of leg work. Thread pitch, fastener design, bearing taper, all that stuff can lead you towards an answer. A dial indicator will give you an answer, except for the seals. In frustration I removed mine and did it the long way.
First, the "click elbow" test. It's a lost and dying art, not one that I would pass of to anyone as a good idea anymore, as it's far too subjective for lots of folks today because they would have to interrupt their text conversations and use both sides of their brain. But, the old "manual" way is quite repeatable and predictable once you get the "feel", so with no seals I set it and marked the adjuster nut.
Second, I went by the "feel the bind" method. How much bind? Well, it's an intermediate amount, not when you can first feel resistance, and not when it's bound up. and WAY less than the seals produce. You'll never feel it accurately, especially with the huge amount of interference in a new star seal, which is pretty common to find at the usual suppliers. Without the seals, it took me no less than four attempts to come anywhere close to acceptable. (By modern standards, these are supposed to get the wheel bearings inspected and repacked each time the co-driver gets a sneeze.)
Using the "torque to 50lbs and then back the nut off" method found in a later TM seemed the best, but they leave a wide variation as well. That WAS repeatable 50lbs, back the nut off 1/16 to 1/4 of a turn was (I believe, I'm not looking...) the called out amount. (That's one half to two flats) I found that pretty sloppy. I found that 1/8 to 3/16 (one to one and one half flats) came out best. Start at one flat for ideal, and then loosen (even if it's close, ONLY loosen) until the lock ring will fit. (it grabs a flat or a corner, no more than half a flat will be needed).
Very boring, bit it's broken into sections so you don't have to bear it all at once. More than most people ever wanted to know.
http://www.timken.com/AntiFriction/player.html