>> Re hydraulic lock cracking the block - I doubt it
Putting the bolts in by hand - you're probably right, it's unlikely, but not a risk I would encourage people to run!
As the bolt goes in fairly slowly when installed by hand, there will be time for the trapped fluid to leak away - and get between the gasket and the block, which isn't ideal.
If, however, the bolt were being machine fitted, or was being installed with a buzz gun, there wouldn't be time for the fluid to leak away. One thing that would happen though is that the oil would lubricate the threads more effectively at pressure, and the relationship between torque and endload would change - I think the acheivable oil pressure would be rather high.
For the M10, grade 10.9, the pre-load at yield was 57 kN, and for 12.9, 69kN.
I agree about the skilled mechanic feeling yield being a potentially accurate method of installing a fastener. Some fastener installation machines actually do just this, they record both fastener torque and angle turned, as the rate of torque increase per unit angle begins to fall, that's where the bolt is yielding, and the machine stops. It's an excellent way to get the most out of a fastener, with the provisio that you have to check the elongation before you can re-use.
I'm sure, having done a quick, back of the envelope type calc, that the MB torquing procedure for the OM606 head bolts, for example, does deliberately take the fastener just into this yield region.