You need a timing gun to set the timing. Its done by shorting the te1-e1 pins to put into timing set mode.
And yes it will have unstable rpm if timing is fully advanced.
You also need to understand that there is no spec for idle speed for this engine, it idles between 800-900 rpm, it will hang idle to 1200 rpm when the car is creeping or the ecu detects higher load.