Just finished changing the timing belt on my 960. While rotating the crank by hand to check for interference, it made me wonder about how accurate this procedure is.

The idea is that if the engine rotates freely by hand through two complete revolutions of the crank, then you can be confident that the cams are not so far out of alignment with the crank as to create interference between the valves and pistons. But this assumes that the hydraulic lifters that transfer movement of the cam lobe to the valve stem are fully extended.

Is it possible for a lifter to be slightly collapsed while rotating the engine by hand? If the lifter then fully extends when the oil pressure comes up, then it might cause interference between the piston and valve.

So my questions are: Is it possible for the engine to rotate freely by hand but cause interference when cranked? If so, how much risk is there in trashing your engine if the timing belt is installed incorrectly?