Yep, I know better than to make it super tight. The problem I run into is that when I tighten the nut, the axle inevitably moves forward in the dropout. I think a decent thick washer (like the one pictured above) should avoid that. My experience is mainly with the stock Nexus setup, which does not work especially well.
I think better quality cranks/chainrings (such as the Sugino 75) also help to mitigate the variation in tension (runout) that occurs with average quality components, minimizing or eliminating the tendency to have tight and slack spots as the cranks are rotated.