With most NPt threads you should be able to get the threads 1/4 engaged by hand and 3/4 is usually max when tightening to the point you feel something is going to give. The O ring is mainly there for people who remove and replace the nozzle freq. Your right you should not tighten the nozzle so tight the O ring explodes.
With the nozzle holder and
check valve attached you should not tug to hard on it, as you can snap the nozzle. the lenght of the check vavle adds over 2" of leverage to it. It should not have so wiggle with just grasphing the nozzle and holder.