Are you using commercial bearings in housings? Pillow blocks, etc?
I'd bet they know what to do.

I believe all the sight glasses I've seen on bearings and on oil skid reservoirs etc have a "running" level indicated, since for a stationary machine expected to be operating for hours at a time a dynamic level check is what makes sense.

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It is recommended by some experts that oil cup should be installed on the side of the bearing housing facing the shaft rotation at the bottom because this will eliminate the chances of overfilling of the housing.

Correct. The Trico literature directs to install the oiler on what would be the "discharge" side of the bearing (if we consider the bearing to act like a pump).

Here is some Trico literature, at a 3rd party site;
http://www.uslube.com/pdf/ConstantLevel.pdf

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However sight glass or level indicators should be installed on the opposite side of the oiler as this will not show the higher oil level than actual, in the machine running condition.

For years oilers had no indication of their outlet level (they only had clear bulb to see the reserve oil). Why would you care about the outlet level "indication" as long as the oiler is installed at the proper height and has oil reserve in the bulb?

For single-bearing reservoirs, we could certainly make the case that IF the bearing is "pumping" enough oil to affect the outlet level indication, THEN oil level is already high enough. i.e. there's no reason to worry about a higher-than-actual indicated oil level masking a low actual level or causing underfeeding.... because the level is not low if the bearing is pumping.

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Is there any recommended practice or standard coveing this part?

Oiler manufacturer's instructions (install the oiler on the discharge side of the bearing).



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(2B)+(2B)' ?