Yes, you relieve the center so that you're only having to fit the outermost 1/8" or so, just like any other neck joint.
The bolts will keep it lined up enough to set the angle and skew. Drill the neck block holes slightly oversized, to give the neck plenty of wiggle room. No, the oversized holes won't hurt the long-term stability of the neck, because once you permanently glue the fretboard extension to the guitar top, it all becomes one very solid joint. Even without gluing it(I often initially string my guitars up for a week or two without gluing it, to test the neck angle) it is one solid joint.
Just like any other joint, you'll have to fit it to the body, first by a coarse-fit, then refine it by chisel and/or flossing with sandpaper. No different than any other joint. It's a simple joint to fabricate, but it isn't any different or easier to fit.
For those who want to try hanger bolts for the first time, buy yourselves a couple of coupling nuts, which are basically one-inch long nuts; they are easy to thread-on and off the studs with just your fingers, when fitting the nut. Beats wrestling with a thin little nut in a recessed hole. When you're done fitting, take-off the coupling nuts and replace them with flanged nuts and check that the studs aren't too long and will be covered by your label(if you care to hide your nuts
).