[304065]

Well, since you can't go by turns because of the knife edge bit, you have to go by elongation or stretch to ensure you have the correct preload.

Stretch is measured by a micrometer. In an industrial application, often times a Go/Not-Go gage is used, this is basically a big machined cast iron horseshoe. It fits around the application. In your case, if the bolt has not yet achieved sufficient preload, then it will be too short. If it's streched too far, it will be too long.

The only concern I would have with this approach is whether or not there is sufficient friction or variability in the "cutting" portion of bolt rotation-- if the material were harder to cut or friction were higher, you might end up with the assembly being longer (because the cutting edge didn't sink in) and give the appearance of correct preload in the fastener when it wasn't actually present.

Indicating fasteners seem to be the right answer . . . they are probably more expensive any may require a redesign.

Can you redesign to use a cutting sleeve of a fixed length that will provide you with a positive stop before bolt deformation begins?

By the way, I am not an engineer. Not by a long shot. If I told you my formal training you would laugh. So don't stand under anything that I advise you on.