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There are varying opinions on it. Now that I have a dyno pull I can set it up to be pretty close. Then I can play with cam parameters and indexing to see shifts in torque/hp curves. This also works for head porting and valve sizes effects. So, I think it was worth the $$ in my case.
It varies. In the cases that I have been able to compare to actual dyno results, it seems to be within 5% on carbed engines that are not too wild. Really varies with FI engines with exotic parts.
It can be amazingly accurate if you "calibrate" it like 65Z01 said. What I mean is to get a dyno for a very similar engine and then tweak it (lie to it) 'till the dyno 2000 curve looks like the real dyno curve.
You may have to tell it you have stock exaust instead of hipro or headers. May have to change the air flow if the intake manifold etc. When you get the base configuration right, it's pretty good for changing single items.