i know what reference level is but are you "supposed" to set it up so when your receiver reads 0.0 dec then it is at THX reference level 75 dec. is that how it is supposed to work out?

That's the recommendation, but it's certainly not anything mandatory - plenty of folks set the volume to -10dB and calibrate to 75dB (as with highly efficient speakers that end up needing a lot of negative trim) or just prefer to calibrate the "0dB" volume position to some lower level due to listening habits.

The most critical factor in calibration is to get the channels all matched.