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The link below says you can use the LS2 dampener on a LS1 provided your LS1 block is NOT already drilled for the LS1 dampener. I imagine you just drill the LS1 block to accomodate the narrower bolt centers of the LS2 dampener. Only question would be were exatly to drill......
Is this really needed if you use a high quality timing chain set like the Cloyes Hex adjust 3153AL?
Depends. Normal street driving probably no. What is does is prevent chain whip at certain RPM where there are known issues. If you run on the track then it may be a good thing to have (track being HPDE rather than drag racing where you pass through the RPM range quickly). This is at least my understanding of the issue.
Another thing to be careful of is to make sure the two sprockets are aligned during installation. This should be checked with the chain off, then install the chain.