"I'm about to replace my shaft packing... any hints?"
I have three comments. I'd love to take credit for them, but I picked them up watching Jesse at Nanaimo Shipyard replacing the packing on Island Eagle. My shaft is 3 1/2" in diameter, and the packing is 3/4", so it was a fairly tough job. He passed on three tips:
First, cutting the packing to length by wrapping it around the shaft is the way to do it. However, Jessee cut the ends on a 45 degree angle, so they would overlap slightly instead of butt up against each other. This allows a bit of slop in the length. Plus it will seal better.
Second, in many cases the shaft will droop slightly, making the space of the packing on the bottom of the shaft smaller than the space at the top (sounds like you have this problem). You can check the space using various sized sockets as feeler gauges. Use wedges or a rope to (gently) lift the shaft if required (in my case the shaft weighs several hundred pounds so we used a small jack).
Finally, the packing is often a bit oversized. Jesse's trick was to use a hammer and slightly squish the packing by pounding gently on it. This broke down the flax just a bit and allowed the packing to fit in better.
Hope this helps,
P.S. Here's a video showing replacing packing on a 5" shaft WHILE THE BOAT IS IN THE WATER!!! (done by Nanaimo Shipyard). He flattens the flax at about 0:46 of the video.